Australian petrol prices have spiked to the highest level in four months, providing an unwelcome headwind to already stretched household finances.
According to Commsec, citing data from Australian Institute of Petroleum (AIP), the average price for unleaded petrol across the country rose by 9.1 cents to 143.7 cents a litre last week, largely reflecting an end to price discounting in Sydney, Melbourne and Brisbane, rather than higher wholesale prices.
“The high-point of the petrol discounting cycle was March 20 in both Sydney and Melbourne and March 17 in Brisbane,” said Craig James, Chief Economist at Commsec.
“The alignment of discounting cycles on the eastern seaboard largely explains the spike in the national average price in the past week.”
According to Commsec, average pump prices jumped by 19.3 cents in Melbourne, 15.9 cents in Sydney and 11.6 cents in Brisbane last week.
Elsewhere, prices rose modestly in Perth, Darwin and Hobart but fell in Adelaide and Canberra.
In average terms, calculated by the number of registered vehicles across various parts of the country, the average unleaded price in metropolitan areas rose by 11.5 cents per litre last week, faster than the 4.4 cent increase seen in regional areas.
While fatter retail margins was the main factor behind the national increase last week, the average wholesale unleaded petrol price also rose from a week earlier, inching up by 1.7 cents to 131.3 cents a litre.
Singapore gasoline prices, where Australian fuel is sourced from, also rose by 1.4% in Aussie dollar terms during the week to 67.96 cents per litre.
With household spending already softening, James said the increase in pump prices is “bad news for retailers”.
“The price of unleaded petrol at the bowser is generally $1.35-$1.50 a litre, up from $1.15-$1.30 earlier in the year,” he said.
“This equates to an average family spending around $20 extra per month on filling up the car with petrol. And the extra cost will keep consumers cautious about spending on non-essential or discretionary items.
“The higher petrol price is bad news for retailers.”
According to data from the ABS, Australian retail sales, after sliding by 0.4% in December, only grew by 0.1% in January.
That weakness followed a sharp slowdown in household spending in the second half of last year, contributing to the steep deceleration in the broader economy over the same period.
Along with soft growth in household incomes, falling home prices in many parts of the country, along with a small increase in the average amount of household income being saved, are other factors that have contributed to weakness in spending levels seen in recent months.
The slowdown in household spending has seen financial markets price in at least one 25 basis point rate cut from the RBA this year, with the risk of a second.
That partially reflects growing concern that sluggish economic growth will lead to an increase in Australian unemployment and continued weakness in broader inflationary pressures.
Extracted from Yahoo Finance