Rising international oil prices continue to flow through to the petrol bowser in Australia, fuelling concerns about cost of living pressures.
At the weekend, the Brent crude oil price briefly topped $US85 a barrel for the first time since 2018.
Australian Institute of Petroleum figures show the national price for unleaded petrol rose by a further 6.9 cents per litre on average in the past week to 160.7 cents, a 13-year high.
“Compared with the lows of 18 months ago it is costing motorists an extra $56 each time they fill up a 70 litre car with petrol,” Commonwealth Securities chief economist Craig James said.
Rising fuel costs are expected to be a key driver in next week’s inflation figures for the September quarter.
At this stage, economists are looking at a 0.7 per cent increase in the consumer price index for the quarter due for release on October 27.
While the annual rate is forecast to ease to 2.9 per cent from 3.8 per cent as of the June quarter, it would still remain at the top end of the Reserve Bank of Australia’s two to three per cent inflation target.
In the June quarter, the annual rate of CPI spiked to its highest level in some 13 years as a result of rising fuel prices and the unwinding of government support measures introduced during the depths of last year’s recession.
Still, National Australia Bank economist Taylor Nugent says there remains a high degree uncertainty around this quarter’s figures, not least about the lingering drag on prices from the HomeBuilder grants scheme.
Underlying inflation – which smooths out excessive price swings and is more linked to interest rate decisions made by the RBA – is likely to remain subdued.
Early predictions expect underlying inflation to rise 0.4 per cent in the September quarter to 1.7 per cent.
The RBA has persistently said it will not lift the cash rate until inflation is sustainably within the two to three per cent inflation target, a condition it does expect to met before 2024.
However, there are concerns about rising inflation globally.
New Zealand saw an unexpected 2.2 per cent jump in its consumer price index for the September quarter released on Monday.
This took the annual rate to 4.9 per cent, its highest rate since 2011.
Economists at Barclays believe this all but assures the Reserve Bank of New Zealand will lift its key interest rates again in November.
But addressing a conference last week, RBA deputy governor Guy Debelle insisted circumstances in Australia are quite different from those being seen in other countries, particularly when it comes to wage growth.
Even so, Australian consumer aren’t convinced with inflation expectations having risen to the highest level since 2014.