David Scutt, 02 November 2015

Australian petrol prices, continuing the trend seen throughout October, declined last week, dropping to the lowest level seen in eight months.

According to analysis conducted by Commsec’s chief economist Craig James, the average Australian petrol price fell 1.5 cents to 124.7 cents per litre last week.

From a year earlier the average petrol price has now fallen by around 19 cents, something that should help boost spending power and lift consumer sentiment in James’ opinion given “filling up the car with petrol is the single biggest weekly purchase for most households.”

Based off data provided by the Australian Institute of Petroleum and the ABS household expenditure survey, it suggests households are now spending around $20 less on petrol per month on average than they were just four months ago.

That’s not an insignificant reduction, and should partially counter out-of-cycle mortgage rate increases announced by Australia’s largest banks that will increase the cost of servicing a home loan.

It may also see the RBA hold off on reducing interest rates tomorrow, an outcome that a majority in markets now favour.

“The Reserve Bank will certainly take the low petrol price – and low inflation more generally – into consideration when setting interest rates tomorrow,” says James.

Extracted in full from Business Insider Australia.