High petrol prices here to stay, economist Craig James warns

PETROL prices of up to $1.70 a litre are here to stay with cafes and restaurants set to feel the pinch from reduced spending by motorists, a chief economist says.

Australian motorists should get used to paying $1.50 to $1.70 a litre for petrol, a chief economist says.

AUSTRALIAN motorists should get used to paying $1.50 to $1.70 a litre for petrol, a chief economist says.

And the steeper amounts drivers are being slugged at the bowser risk eating into spending at cafes, restaurants and takeaway outlets, according to CommSec’s Craig James.

CommSec estimates that the average household is spending $252.16 a month on petrol. That’s about $30 more than six months ago.

MORE NEWS: ENERGY COSTS BITE DEEPER INTO FAMILY INCOME

HOUSEHOLDS ANGRY OVER ENERGY ‘ROGUES’

HOW SUPERMARKETS WILL CATCH FRUIT AND VEG THIEVES

In the past week, the ­national average unleaded fuel price was 157.6c a litre — the highest it’s been since the week to January 5, 2014.

“Filling up the car is the single biggest weekly purchase for most families,” said a weekly economic insights note Mr James issued.

“So a higher petrol price has the potential to trim spending on discretionary or non-­essential items.”

Motorists should expect high petrol prices to stay. AAP Image: John Gass

The extra $30 a month households are spending on fuel is “bad news for cafes, restaurants and fast-food outlets”.

It added: “Motorists should get used to paying $1.50 to $1.70 a litre for fuel.”

A time period for that range was not specified in the note.

Both the International Energy Agency and Organisation of the Petroleum Exporting Countries had trimmed global oil-demand forecasts, and while oil supplies were constrained, the expectation was that supply and demand for oil were roughly in balance.

But the “other piece in the puzzle” for motorists is the Australian dollar.

“If US interest rates continue to rise, this would point to a weaker Aussie dollar and the potential for higher local petrol prices,” the note said.

“The bottom line is motorists need to watch the petrol cycle closely and use apps to find the cheapest places to fill up.”

The RACV website yesterday listed Melbourne’s average unleaded fuel price as 152.4c a litre. The lowest recorded price was 145.7c a litre, while the highest was 159.9c a litre.

Late last month, when ­prices were at the peak of the metropolitan cycle, many service stations were selling unleaded for 167.9c a litre.

Melbourne prices peak, then gradually fall to a discounted level, before peaking again. Regional price movements are not as volatile.

[e-mail]

@KarenCollierHS

MORE HERALD SUN STORIES:

MEGHAN MARKLE PREGNANT, KENSINGTON PALACE CONFIRMS

SHANGRI-LA HOTEL SET FOR MELBOURNE CBD