Households could be slugged with a record-breaking 47 per cent rise in out-of-pocket electricity costs next year unless the federal and state governments extend billions in energy subsidies, which economists have warned are doing little to solve the inflation problem.

Treasurer Jim Chalmers celebrated figures on Wednesday showing headline inflation had tumbled to a three-year low of 2.7 per cent in August from 3.5 per cent in July, falling back inside the Reserve Bank of Australia’s 2 per cent to 3 per cent inflation target band for the first time since October 2021.