“The days of super-cheap prices look to have ended – at least for now, ” is the depressing news for motorists courtesy of Commsec chief economist Craig James, who believes a sharp rise in Singapore wholesale gasoline prices last week may result in a lift in Australian petrol prices in the weeks ahead.
As the excellent chart above shows he may well be on the money. Marked in red, Singapore gasoline prices tend to lead Australian retail petrol prices in blue. Given the 6.6c spike in the Singapore price last week, the second-largest weekly increase in the past 5.5 years, it suggests prices at the pump in Australia are likely to rise too should the relationship remain true.
James estimates that “motorists may need to find an extra $4.50 every time they fill their tanks with petrol” should the spike in wholesale prices be sustained.
Given Westpac sighted the rebound in petrol prices as one of the reasons consumer sentiment fell heavily last week any continued lift in petrol prices may have create a further drag on confidence, and potentially consumer spending, should it continue in the months ahead.