Sydney petrol prices hit new high ahead of school holidays

Sydney’s petrol prices hit a fresh high on Monday, with economists warning further increases could impact the Rserve Bank’s plans for interest rates. Here’s why.

Sydney petrol prices have hit their highest levels this year ahead of the school holidays, with

economists warning further increases could fuel inflation and impact the potential for interest rate cuts.

The harbour city’s Unleaded 91 petrol price climbed up to $2.35 a litre on Monday at over 100 petrol stations across Sydney, while one in Caringbah was asking for up to $2.37 for the cheapest form of unleaded, according to data from Compare The Market.

It marks the highest price for U91 this year, a four-cent jump from the city’s previous record of $2.31 a litre during the February-March fuel price cycle.

CommSec Chief Economist Craig James said there was “a risk” drivers could see prices rise even higher, with high petrol prices fuelling inflation and potentially impacting the Reserve Bank’s ability to cut interest rates.

“It really complicates the matter for the Reserve Bank, they’re trying to get inflation down but higher petrol prices have the potential to flow through to food, goods and service prices,” Mr James said.

“It complicates the process of getting inflation and interest rates down and creates a higher cost of living, which means motorists have to look at their spending and decide what to cut back.”

Citywide averages for Unleaded 91 in Sydney dropped to $1.89 a litre by the end of March, but the average across the city is now $1.99 a litre, up 5.29 per cent in a week.

The price of Unleaded 91 has climbed to its highest level this year.

The highest ever price recorded for U91 in Sydney was in October, when stations charged $2.39 a litre days after the Israel/Palestine conflict broke out.

Mr James said ongoing tensions in the Middle East and Ukraine combined with “strong market demand” for gas and oil products were combining to push up the price of petrol.

He said while federal government had “scope” to consider waiving the fuel excise in a bid to lower prices at the bowser after the Morrison government made the move for six months in 2022, savvy motorists should shop around to save some cash themselves.

“The government must look at it carefully to see where prices are at the moment and where they’re headed, but the federal budget is solidly in surplus … there’s certainly scope for the government to do something if it was deemed useful and practical to do so,” he said.

Motorists have been encouraged to shop around. Picture: Julian Andrews

“But motorists should really shop around themselves,

use fuel comparison apps to keep their costs down … even if you’re a quarter or half-full, fill up now to save some money.”

Compare The Market fuel expert Chris Ford said motorists could save up to 60 cents a litre if they fuelled up with the city’s cheapest fuel instead of its most expensive as prices rise ahead of the school holidays next week.

“When we’re in this part of a fuel pricing cycle, we tend to see the biggest difference between the cheapest and the most expensive stations when prices are increasing,” Mr Ford said.

“We expect more and more stations to increase their prices to the new high of $2.35 a litre for Unleaded 91 over the next few days … but there’s still time to fill up for less.”

Mr Ford suggested parts of Sydney’s west could offer drivers a bargain.

“Many stations in suburbs like Greenacre, Ashfield, Revesby, Granville, Lidcombe and Strathfield are yet to increase their prices,” he said.

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Originally published as Sydney petrol prices hit new high ahead of school holidays