- Crude oil prices recently hit the highest level in four years. At the same time, the Australian dollar fell to the lowest level in more than two years.
- Combined, that’s seen the average cost for a litre of petrol in Australia jump nearly 50 cents since early 2016.
- Prices are likely to head even higher in the short-term, and could boost inflation significantly should they hold at current levels.
Brent crude oil futures — the global benchmark — recently hit the highest level since October 2014.
At the same time, the Australian dollar fell to the lowest level since February 2016 against the greenback.
Throw the two together and it delivers some unwelcome news for Australians motorists.
This chart shows what many motorists already know: petrol prices are soaring.
From Macquarie Bank, it tracks the Tapis crude oil price — where Australia’s petrol is sourced — overlaid against the average retail price for unleaded petrol.
Compared to early 2016, the average cost for a litre of petrol has increased by nearly 50 cents, a hefty burden on Australian households at a time when income growth has been weak.
The bad news is prices might be about to get even higher.
As the chart shows, the Tapis crude price has spiked recently, and where it goes, so too goes the petrol price.
Currently, it points to the average price pushing through 160 cents per litre in the near-term, and that’s only for regular unleaded.
If you see a good price and aren’t a heavy fuel user, it may be a good time to top up the tank.
Along with potentially weighing on discretionary spending in the months ahead, Macquarie estimates that petrol will likely add around 0.3 percentage points to CPI in the December quarter should prices hold around current levels.
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