Petrol prices go boom



CapturePetrol prices: According to the Australian Institute of Petroleum, the national average Australian price of petrol fell by 1.2 cents per litre to 140.9 cents per litre in the week to June 21. The petrol price is 9.5 per cent lower than a year ago.

 Mixed across Australia: Pump prices rose in five of eight capital cities last week. The fall in the national price reflected the downslope of the discounting cycle in Melbourne and Brisbane, and to a lesser extent, Sydney.

 Motorists in Melbourne and Brisbane enjoyed the downslope of the discounting cycle last week. Prices peaked in Sydney but Adelaide pump prices rose as the discounting cycle ended. But a better gauge of underlying national petrol prices is the Perth market, where prices rose by 2 cents last week.

 CommSec calculates that it costs the average family $169 a month to fill their cars with petrol, up almost $40 from early February, but still $18 cheaper than a year ago. Filling up the car with petrol is the single biggest weekly purchase for most families.

 After falling by 12.2 per cent in the March quarter, the petrol price is currently up by 13.5 per cent in the June quarter, boosting the economy-wide inflation rate by 0.4-0.5 percentage points in the quarter. Petrol remains on track to the biggest quarterly increase in 24½ years (since December quarter 1990).

The good news is that oil prices should fall in H2. But so will the Aussie so the effect will likely be neutral to modestly positive.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.