Treasurer Jim Chalmers has argued cash handouts would only lead to long-term pain by feeding the beast that is inflation.

Retail power prices are expected to rise by 56 per cent over the next two years, while gas prices are also predicted to increase sharply.

Chalmers noted the figure was a nationwide average, with some areas facing greater hikes than others.

“But the numbers as they are in the budget are confronting enough,” he told the National Press Club on Wednesday.

“Some of these price rises are already flowing.”

Chalmers admitted he didn’t know when people could expect costs to start dropping, but stood by Labor’s election commitment to deliver a $275 cut to power prices.

“Yep, it’s in the budget,” he said.

Chalmers said Australia couldn’t afford short term relief and warned it could fan inflation.

“An indiscriminate spraying of cash would have made our inflation challenge more profound, more prolonged, ultimately, more painful,” he said.

“People would’ve felt it through higher prices and higher interest rates.”

The government will instead look towards regulatory measures to put downward pressure on prices.

“It would require a lot of consultation with colleagues and other levels of government and that’s the reason why I’m not prepared to be more specific,” Chalmers said.

“If there’s more that can be done, more will be done. We don’t want to limit our options.”

Grattan Institute chief executive Danielle Wood said the “sobering” power forecasts meant the government would have to take meaningful action.

“They could move to tighter regulation of prices, that would be a big move,” she said.

Wood said rebates could be done in a way that wouldn’t fuel inflation.

The government is boosting Australia’s renewable energy grid to bring prices down.

The budget included $20 billion over 10 years for cheap finance for new electricity transmission links and a $1.9 billion fund to back regional jobs and emissions cuts.

Prime Minister Anthony Albanese said renewable energy was a path towards power price savings.

“Cheaper power bills will come as a result of investment in cheaper energy, that’s just a fact,” he said.

Shadow treasurer Angus Taylor said Labor had broken an election promise on power prices.

“You get more supply into the market, more gas into the domestic network, and more electricity generation, dispatchable electricity generation into the market,” he said.

-AAP