Australian Economy

Rising petrol prices set up Labor’s first cost-of-living challenge

In Sydney’s east on Monday, petrol was retailing for about $2.18 a litre; on the northern beaches the price was nudging $2.10; and in Melbourne’s east the highest price was about $2.05, according to website MotorMouth.

Mr James said the “estimated national petrol price today stands at $2.06 a litre – the highest since late March and up 45.6¢ a litre from recent lows”.

Effect of war in Ukraine

“The record average unleaded pump petrol price was 212.5¢ a litre in the week to March 20 and currently prices are just over 13¢ from record highs.”

According to the Australian Competition and Consumer Commission, which has been monitoring prices since the petrol tax cut was introduced, current price rises are largely due to the effect of the war in Ukraine on international crude oil prices.

“This has led to increases in wholesale prices,” the competition watchdog said.

Brent crude was trading around $US113 a barrel on Monday, up more than half a per cent. Critically for Australia, over the past week, benchmark Singapore petrol prices rose by $US13.05 to a record $US157.20 a barrel.

Mr James said petrol was “set to be break new records” as prices spike and the Australian dollar hit a 22-month low.

The cost of living was a critical battleground during the federal election, with the first-quarter CPI inflation reporting a shock 2.1 per cent in the third week of the campaign, which set up a mid-campaign interest rate rise.

A significant contribution to that was an 11 per cent increase in automotive fuel – the largest price increase since the 1990 Iraqi invasion of Kuwait – which flowed through to higher costs in other areas of the economy.

The Australia Post fuel surcharge, which is published three months in advance, showed the additional impost on business next month will be 6.3 per cent, and will increase to 7.9 per cent in July – both record high levels.

Household spending rose again in March by 6.6 per cent, compared to a year ago, according to the ABS monthly household spending data, with significant increases recorded in recreation, culture, clothing and footwear.

All states and territories recorded increases in household spending in March, compared with March 2021. Victoria (8.5 per cent) and Queensland (8.5 per cent) had the strongest increases in spending through the year.

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