With inflation still biting and household budgets stretched, the debate over price controls has returned to the forefront of Australian economic policy in 2025. Governments at both state and federal levels are grappling with whether capping the price of essentials like groceries, fuel, and energy can provide real relief for consumers—or whether such measures risk creating even bigger headaches down the road.
What Are Price Controls—and Why Are They Back?
Price controls are government-imposed limits on how high (or low) the price of certain goods or services can go. In Australia, they’ve been used historically during crises—think wartime rationing or the petrol price freezes of the 1970s. Fast forward to 2025, and the cost-of-living crisis has seen renewed calls for intervention as supermarket prices, rents, and utility bills keep rising faster than wages.
Some recent examples include:
- Supermarket price caps: In February 2025, the ACCC launched an inquiry into grocery price gouging, and several states floated temporary caps on staple foods like milk, bread, and eggs.
- Energy bill relief: The federal government’s 2025 Budget extended the Energy Price Relief Rebate, effectively capping residential electricity price hikes at 5% per year for eligible households.
- Rental price freezes: The ACT and Victoria expanded their rent cap schemes, limiting annual increases to CPI or 3%, whichever is lower.
Supporters argue these steps are essential for protecting vulnerable Australians. Critics warn that they risk creating shortages, reducing investment, or pushing up prices elsewhere.
The Pros and Cons: What Does the Evidence Show?
Price controls are rarely simple—and their impact depends on what’s being capped, and how. Here’s what recent evidence and expert commentary suggest:
- Short-term relief vs. long-term distortion: While caps can offer immediate help (for example, the 2025 Energy Price Relief Rebate shaved an average $180 off winter bills), they may discourage new supply. Retailers warn that prolonged grocery price caps could see shelves empty of certain products as suppliers cut back.
- Unintended consequences: Rent freezes in Europe and North America have sometimes led to landlords withdrawing properties from the rental market, making it even harder for renters to find a home. Early data from Melbourne’s 2025 rent cap shows a slight uptick in rental property sales, though it’s too soon to judge broader impacts.
- Equity concerns: Caps often benefit all consumers—including those who could afford higher prices. Means-tested support (like targeted energy bill rebates) can be more effective at helping those most in need.
Australia’s Productivity Commission in its 2025 report cautioned that price controls should be a last resort and paired with policies to boost supply and competition.
What’s Next? Navigating Price Controls in 2025
Whether you’re a consumer, small business owner, or investor, it pays to understand the direction of policy. Here’s what to watch for in 2025:
- Grocery sector reforms: The ACCC’s recommendations, due mid-year, could lead to more robust competition laws or ongoing monitoring of supermarket pricing.
- Energy market changes: With global fuel prices stabilising, the pressure for further price caps may ease—but energy retailers warn that under-investment could drive future shortages if price signals are suppressed for too long.
- Housing affordability shake-up: Expect more states to trial rental price moderation, but also to invest in social and affordable housing supply as a longer-term fix.
For everyday Australians, the key is to stay informed and proactive. Review your bills, look for better deals, and take advantage of government support where eligible.
