Australian families could pocket or miss out on hundreds of dollars in savings depending on a series of pricing decisions coming from authorities due in the next few weeks, according to Compare the Market Economic Director David Koch.

Mr Koch said three big events – the Reserve Bank’s rate decision on the 18th, the energy regulators’ draft pricing announcements, and an imminent call on health insurance premiums – could have a major impact on household finances for the rest of the year.

“It’s crunch time for decision makers tugging at the purse strings of Aussie families,” Mr Koch said. “These authorities have the power to deliver considerable relief, or issue fresh pain to people battling the cost of living.

“While there is a lot to weigh up, we’re calling on decision makers to be fair and reasonable with their choices, as well as transparent about the reasons changes are made.

“Australians deserve to know why prices continue to be put up, because ‘inflation’ simply isn’t good enough of an explanation in my books.

“It’s an election year, so the good news is there will be plenty of scrutiny over each decision that’s made.”

Health insurance premiums

A “perfect storm” of inflationary pressures and political tensions have added heat to health premium pricing negotiations this year.

Health Minister Mark Butler has already rejected initial proposals from health funds, urging them to come up with a more “reasonable” average figure to reduce the strain on household budgets.

When the decision is finally made, Australians will have until 1 April to compare their options before the changes take effect.

“We’re urging customers to be prepared as shopping for cheaper deals may be one of the only ways for some to avoid the sting,” Mr Koch said.

“While the headline average figure is what everyone talks about, we know that there can be huge discrepancies between insurers and policies. Last year, we saw increases as low as 0.27% and as high as 5.82% at individual funds, so doing some research can make a big difference.

“Some health insurers will even allow you to pay for your policy a year in advance, which means you can effectively lock in last year’s cheaper prices for the next 12 months.”

Energy price

New pricing “safety nets” will come into effect in July this year but consumers will get the first indication of what could come when regulators release their draft decisions in early March.

The Default Market Offer (DMO) acts as a cap on what energy retailers should charge consumers for a standing offer electricity plan in New South Wales, South East Queensland and South Australia, and the ACT.

Meanwhile the Victorian Default Offer (VDO) is considered a fair price for a standing offer electricity plan, to help consumers discern whether they are on a good deal or not.

Mr Koch said recent reports of higher than normal demand for electricity triggered by extreme weather conditions on the east coast were an early indication prices could increase this year.

“We haven’t seen demand like this for nearly a decade and that volume has been compounded by reduced coal availability and transmission issues,” Mr Koch said.

“Higher wholesale prices could mean bigger bills for households and when the government rebates finally start to roll off the difference could be a real rude shock.

“It’s important to remember, while the DMO provides a safety net for consumers, there are often much more attractive deals on offer for consumers willing to compare and switch.”

Interest rates

But could we finally see some good news on the cash rate front?

Financial markets are now factoring in an 80% chance of a 0.25 per cent interest rate cut at the RBA’s mid-February meeting.

If passed on, a 0.25% could reduce monthly repayments on an average loan of $642,000, by $104 – or around $1,248 over the course of the year according to analysis by Compare the Market.

Mr Koch said that would come as welcome relief for mortgage holders and mean extra cash will help ease the cost of living pressures.

“If you annualise the last six months of trimmed mean CPI results, it would show 2.7 per cent rather than the current annual of 3.2 per cent. It shows inflation is getting back under control over recent times,” Mr Koch said.

“Consumers are in the bunker even though governments are spending big and not helping the economic figures.

“Keeping rates too high for too long means the economy could slow more than you want and it is slow to turn around. I think it’s time to stop punishing homeowners, especially young homeowners, who have had to cope with higher property prices, bigger rates, as well as massive insurance bills.”