Decade low petrol prices to add further deflation

From COMMSEC:

• Retail petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 3.2 cents per litre to 111.2 cents per litre in the week to August 14 – a four month low.
• Today the national average wholesale (terminal gate) unleaded petrol price has lifted off recent 5-month lows, up 1.3 cents a litre to 99.6 cents.
• MotorMouth records the following retail prices for capital cities today: Sydney 95.7c; Melbourne 107.4c; Brisbane 108.4c; Adelaide 119.4c; Perth 102.3c; Canberra 118.8c; Darwin 115.9c; Hobart 121.4c.
• Motorists are certainly benefiting from cheap global oil prices. Petrol prices continue to drift lower, across a number of the capital cities. Not only is the terminal gate (wholesale) price holding just above recent five month lows, but Sydney petrol prices have now been falling for a month, and are today holding at around 95 cents a litre. In fact the average price in Sydney over last week was 100.5 cents a litre – the lowest average petrol price in 11 years.
• In Melbourne and Brisbane petrol prices have been falling for three consecutive weeks and are holding at around 107 cents a litre. Interestingly motorists in Adelaide had enjoyed fuel prices closer to 91 cents a litre last week before they surged higher due to the vagaries of the discounting cycle. No doubt Adelaide motorists would be best served holding off filling up the family vehicle over the next week.
• The source of cheaper petrol prices is simply down to the glut of oil on global markets. Not only has there been a lift in US crude oil inventories in the past couple of weeks but a lift in US oil rigs has also added concerns about the lift in future supply. In addition the firmer Aussie dollar near US77 cents is ensuring that the slide in global oil prices is filtering through to savings at the pump for motorists.
• The focus of oil markets now shifts to an informal meeting of oil producing nations set for September 26-28 in Algeria. Leading up to that meeting it is likely that oil prices will remain volatile on speculation that Oil producers may look at avenues to limit output and thus support prices.
• According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 3.2 cents per litre to 111.2 cents per litre in the week to August 14. The metropolitan petrol price fell by 3.8 cents to 108.6 cents per litre while the regional price fell by 2.2 cents to 116.4 cents per litre.
• The national average Australian price of diesel petrol fell by 0.9 cents to 118.5 cents per litre in the week to August 14. The metropolitan price fell by 0.9 cents to 117.5 c/l, while the regional average price fell by 1 cent to 119.3 c/l.
• Average unleaded petrol prices across states and territories over the past week were: Sydney (down 5.8 cents to 100.5 c/l), Melbourne (down 7.2 cents to 110.8 c/l), Brisbane (down 5.9 cents to 110.4 c/l), Adelaide (up 15 cents to 94.9 c/l), Perth (down 3.1 cents to 112.2 c/l), Darwin (down 1.2 cents to 116.6 c/l), Canberra (down 1.8 cents to 119.8 c/l) and Hobart (down 1 cents to 121.6 c/l).
• Today the national average wholesale (terminal gate) unleaded petrol price stands at 99.6 cents a litre, up 1.3 cents a litre over the week. The terminal gate diesel price stands today at 99.8 cents a litre, up 0.7 cents a litre.
• Last week the key Singapore gasoline price rose by US$2.55 or 5.1 per cent to US$52.65 a barrel. And in Australian dollar terms the Singapore gasoline price rose by $3.05 a barrel or 4.7 per cent to $68.46 a barrel or 43.05 cents a litre.
• MotorMouth records the following retail prices for capital cities today: Sydney 95.7c; Melbourne 107.4c; Brisbane 108.4c; Adelaide 119.4c; Perth 102.3c; Canberra 118.8c; Darwin 115.9c; Hobart 121.4c.

This is won’t make much difference to the RBA’s analytical series which filter out such movements but there is a strong correlation between oil and producer prices, that is, supply side inflation. The Australian Bureau of Statistics (ABS) recently released Producer Price Index (PPI) data for the June quarter, which registered a 0.1% quarterly rise in final (stage 3) prices and an increase of only 1.0% over the year: