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Petrol price pain; Improving budget outlookWeekly petrol prices
Petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 2.6 cents last week to 135.9 cents a litre. But discounting cycles ended in major capital cities last week so current pump prices are generally well up on a week ago.
Monthly Budget: The mid-year economic and fiscal outlook (MYEFO) is expected next Monday. In the year to October the budget deficit stood at $31.7 billion, just above the estimate of $29.4 billion for the full 2017/18 year. But the ‘profile’ deficit is tracking lower than the expected outcome for 2017/18. 
What does it all mean?
In Sydney today the terminal gate (wholesale) price is 124.2 cents a litre. Meanwhile MotorMouth records the average retail or pump price of fuel at 144.9 cents a litre. The gross retail margin (before other costs are taken out) stands at 20.7 cents a litre – one of the highest levels recorded. Still, last Tuesday the gross retail margin was just 2 cents a litre. The bottom line is that motorists must closely follow the discounting cycle otherwise filling up the car with petrol could end up costing an extra $10-12.
In eastern and southern capital cities it takes around three weeks for petrol prices to fall from the high points to the lows of the discounting cycle. The good news – albeit modest – is that the wholesale price has fallen 0.7 cents a litre over the past few days.
The mid-year budget update is expected next week. The government is likely to trim the projected deficit by around $2-3 billion. Overall the economy is tracking a little better than thought around seven months ago.
What do the figures show?Petrol prices
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol fell by 2.6 cents last week to 135.9 cents a litre. The metropolitan petrol price fell by 4.1 cents to 134.8 cents per litre while the regional price rose by 0.1 cents to 137.9 cents per litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 2.2 cents to 134.9 c/l), Melbourne (down by 9.6 cents to 132.5 c/l), Brisbane (down by 6.0 cents to 134.1 c/l), Adelaide (down by 9.6 cents to 133.5 c/l), Perth (up by 0.3 cents to 137.7 c/l), Darwin (up by 1.6 cents to 148.0 c/l), Canberra (up by 2.2 cents to 146.9 c/l) and Hobart (up by 0.2 cents to 143.0 c/l).
The national average Australian price of diesel petrol rose by 0.7 cents to 136.3 cents per litre. The metropolitan price rose by 0.7 cents to 136.7 c/l, while the regional average price rose by 0.7 cents to 135.9 c/l.
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 124.1 cents a litre, down 0.7 cents over the week. The terminal gate diesel price stands at 123.0 cents a litre, down 0.7 cents over the past week. 
Last week the key Singapore gasoline price fell by US$1.15 or 1.5 per cent to US$74.70 a barrel. In Australian dollar terms the Singapore gasoline price fell by 83 cents or 0.5 per cent to $99.44 a barrel or 57.81 cents a litre.
MotorMouth records the following average retail prices for capital cities today: Sydney 144.9c; Melbourne 131.4c; Brisbane 148.2c; Adelaide 146.2c; Perth 127.2c; Canberra 149.0c; Darwin 149.5c; Hobart 143.2c. 
Monthly budget
In the twelve months to October 2017, the Budget deficit stood at $31.7 billion (around 1.8 per cent of GDP) – better than the average deficit over the past year of $34.9 billion.
Smoothed revenues (twelve months to October) were up 6.6 per cent on a year ago – just off the fastest growth in 53 months. Expenses rose by 4.0 per cent over the same period, up from the 12-month average of 3.8 per cent.
The Department of Finance noted: “The underlying cash balance for the financial year to 31 October 2017 was a deficit of $23,130 million, which is $3,550 million lower than the 2017-18 Budget profile deficit of $26,680 million.”
In terms of the fiscal balance, “The fiscal balance for the year to 31 October 2017 was a deficit of $17,181 million, which is $8,820 million lower than the 2017-18 Budget profile deficit of $26,001 million. As with the net operating balance, the difference primarily results from higher than expected revenue.”
Receipts: “Total receipts were $3,247 million higher than the 2017-18 Budget profile.”
Payments: “Total payments were $871 million lower than the 2017-18 Budget profile.”
The Government currently expects an underlying deficit of $29.4 billion for 2017/18.
Receipts from the Goods and Services Tax stood at $63.9 billion in the twelve months to October, up 5.0 per cent on a year ago. The Government has forecast GST receipts of $65.71 billion for the entire 2017/18 year.
Actual GST receipts for the four months to October stood at $22.2 billion, just above the Budget ‘profile’ of $22.1 billion.
What is the importance of the economic data?
Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory’s metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
The Department of Finance releases the Government Financial Statements (Niemeyer Statement) almost every month. The statement allows investors to track the current Budget position and provides insights into the effectiveness of fiscal policy.
What are the implications for interest rates and investors?
If inflation is to lift from low levels, a higher oil price is likely to be one of the drivers. So clearly fluctuations in oil prices are worth watching. The supply of oil is being restricted and stronger global economic growth is boosting oil demand.
Federal Treasury is not expected to make major changes to the economic or fiscal projections.
Originally published by Craig James, Chief Economist, CommSec