The Albanese government will spend $7.8 billion on cost-of-living measures, including extending temporary electricity bill relief for a year and expanding it to every household, including the nation’s wealthiest families.

The decision is a key plank in Treasurer Jim Chalmers’ plan to mechanically lower headline inflation back to the Reserve Bank’s target band by this year, which economists have labelled a “political trick” that will fail to temper underlying price pressures or bring down interest rates.