Federal treasurer Jim Chalmers says the government's energy market intervention is putting downward pressure on electricity prices.
The plan — which included a price cap on gas and coal prices — was announced in December last year and was aimed at alleviating skyrocketing energy prices along the east coast.
"Our plan is designed to take some of the edge off these energy price rises, and we're really encouraged to see that's the case," Mr Chalmers told ABC's Insiders program.
"We're obviously not getting carried away — obviously, some of the price rises from last year are still flowing through to bills, but it's a very encouraging outcome."
New Treasury analysis shows big electricity price increases forecast by the energy market for 2023 have dropped significantly since the federal government unveiled its market intervention.
The analysis of ASX futures data shows a wholesale price drop of 41 per cent in NSW, 46 per cent in Queensland, 34 per cent in Victoria and 48 per cent in South Australia in early February compared with November, before the price caps were announced.
Mr Chalmers said while he's not clear when power prices will stop increasing there are "very encouraging" indications the energy plan will work throughout the course of the year.
Inflation pressures continue
The Reserve Bank last week lifted interest rates for the ninth consecutive time — to 3.35 per cent — to keep up with rising inflation.
Treasurer Jim Chalmers said inflation remains the biggest challenge in the Australian economy, as it sits at a 32-year high of 7.8 per cent.
However, Mr Chalmers promised the government's energy plan is taking the pressure off.
"It's a very difficult time for Australians dealing with these cost-of-living pressures, which are coming at us from around the world but being felt around the kitchen tables of this country," Mr Chalmers said.
"That's why the primary focus of our economic plan is a combination of three things: cost-of-living relief where it doesn't add to inflation, dealing with the issues in our supply chains, including our workforce issues that we inherited, and, thirdly, showing some spending restraint in a responsible budget."
The Reserve Bank earlier this month warned of at least two more rate rises, drawing more criticism of decisions made by the bank's Governor Phillip Lowe.
Mr Chalmers deflected questions on whether Mr Lowe's term will be extended, while saying the governor had the "hard job" of getting on top of inflation.
Mr Chalmers said he'll receive recommendations from the government's review into the Reserve Bank next month, with a decision on whether Mr Lowe is reappointed to be made in the middle of the year.
"It is an opportunity to think about the best structures and processes and objectives of the Reserve Bank going forward," Mr Chalmers said.
"It isn't about one person or about one decision or even one set of decisions, it's about how we take the bank forward into the future."
Recession concerns dismissed
The federal treasurer has also dismissed concerns the country is at risk of falling into a recession, amid rising interest rates.
However, Mr Chalmers acknowledged the economy is still facing several challenges.
"We've got a combination of challenges in the economy right now and we expect our economy to slow considerably this year, both the Reserve Bank and the Treasury expect that to be the case because of that combination of consequences flowing through from higher interest rates and some tricky global conditions," he said.
Shadow Treasurer Angus Taylor criticised the federal government for not doing enough to relieve pressure for families, saying the "the worst is yet to come."
"The fact of the matter is energy prices are going up — Australians are facing higher bills for energy, not lower bills," Mr Taylor said.
