Petrol prices hit highs ahead of RBA meeting

The national average petrol price has surged to $2.11 per litre as millions of Australians pack up the car for school holidays.

RBA governor Michele Bullock will chair her first board meeting on Tuesday. Picture: John Feder

The national average petrol price has surged to $2.11 a litre, revisiting records reached during last year’s global energy crisis and delivering another blow to households struggling with cost-of-living pressures.

The price of unleaded petrol peaked above $2.12/litre in March and July last year when Russia’s invasion of Ukraine unleashed chaos in energy markets and triggered government fuel subsidies around the world.

This time, motorists in the middle of school holidays are left bearing the brunt of higher prices, although there are signs that Australians in capital cities – aside from Brisbane – saw some relief last week.

Across Sydney, unleaded cost an average of $2.07/litre on Sunday, according to Motormouth, an 8 cent improvement on a week earlier. Melbourne motorists were paying $2.14/litre at the weekend, or 9c lower than the previous Sunday.

Prices in Brisbane, however, jumped 30c in a week to $2.29/litre, according to the latest Motormouth report.

Unleaded petrol averaged $1.95/litre in Perth on Sunday, $2.13 in Canberra and $2.14 in Hobart, the latest report shows.

The latest pump price report from the Australian Institute of Petroleum comes as Reserve Bank governor Michele Bullock prepares to chair her first board meeting on Tuesday, with economists and investors anticipating the cash rate will remain at 4.1 per cent for a fourth consecutive month.

The weekly national unleaded fuel price has averaged $1.87/litre this year, above last year’s average of $1.84 and almost a third above the $1.42 average in 2021. Despite climbing fuel costs, economists at three of the four major banks say interest rates have peaked for this cycle, with National Australia Bank alone predicting one more rise in November to 4.35 per cent.

AMP chief economist Shane Oliver said the high petrol prices could add 0.3 percentage points to consumer price growth in the September quarter, and was something the RBA board would consider and likely refer to in the statement accompanying Tuesday’s rates decision.

Dr Oliver, who put the chance of a further rate hike by November or December at about 40 per cent, said climbing fuel costs “risk adding to inflationary expectations, but it won’t be enough to tip them (the RBA board) over the edge”.

Mortgaged households are already struggling with a 50 per cent increase in their home loan repayments after a dozen hikes pushed the RBA’s cash rate target from 0.1 per cent in May last year to 4.1 per cent in June.

Ms Bullock has inherited a sharply disinflationary trend as a slowing economy and the end of pandemic-era global supply snarls drove consumer price growth – as measured quarterly – from 7.8 per cent in December to 6 per cent in June.

Annual inflation on a monthly basis fell even further – from 8.4 per cent to 4.9 per cent in July – but reversed to 5.2 per cent in the year to August following a 9 per cent jump in fuel costs in the month, Australian Bureau of Statistics data from last week showed.