Higher petrol prices on the way Featured

Tuesday, 16 June 2015 00:00 Written by  Published in Australia News
The average price of a litre of petrol in the week to June 14 was $1.42, compared with less than $1.10 at the start of the year. The average price of a litre of petrol in the week to June 14 was $1.42, compared with less than $1.10 at the start of the year. Photo: Supplied

Sorry, drivers. It looks like that brief, beautiful moment of cheap petrol you've probably just got used to is coming to an end.

A report from market researcher CommSec shows petrol is set for its biggest quarterly price jump in nearly 25 years.

The average price of a litre of petrol in the week to June 14 was $1.42, compared with less than $1.10 at the start of the year.

CommSec chief economist Craig James said the increase meant motorists were paying $21 more to fill up an average sedan.

He said the impact on household budgets would depend on how readily people had adjusted to the lower prices over the past few months.

"The key unknowns are how many families adjusted their budgets to the lower petrol prices … and how many are still working on the higher pump prices in operation over 2014," he said.

"Petrol is the single biggest weekly purchase for most families."

So far in the three months that will end June 30, CommSec estimates the price of petrol has increased 13.1 per cent. If this continues to the end of the month, it will be the biggest quarterly increase since December 1990.

The price of oil around the world plummeted in 2014. Increased production from the US prompted a price war with the Organization of Petroleum Exporting Countries, and motorists around the world benefited as lower prices reached the bowser.

But since February, prices have begun to rebound. While petrol is still cheaper than it was a year ago, the price has increased by about 30 per cent.

Mr James said higher petrol prices and a weaker Australian dollar were likely to make people more reticent about spending.

This could affect the economy more broadly, and could even influence the Reserve Bank of Australia to consider cutting interest rates.

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