Petrol lifts 10 per cent over the past quarterWeekly petrol prices
Petrol: According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.9 cents last week to 137.6 cents a litre.
Inflation boost: Petrol rose by 10 per cent in the December quarter and this will add around 0.35 percentage points to the quarterly change in the Consumer Price Index (data released on January 31).
Inflation gauge: The Melbourne Institute monthly inflation gauge rose by 0.1 per cent in December to stand 2.3 per cent higher over the year. It was the lowest annual increase in six months. The petrol figures have implications for retailers, especially petrol marketing groups.
What does it all mean?
World oil prices continue to lift and are near 3-year highs. On Friday Brent crude rose by US61 cents or 0.9 per cent to US$69.87 a barrel. The US Nymex price rose by US50 cents or 0.8 per cent to US$64.30 a barrel. Over the week Brent rose by 3.3 per cent and Nymex rose by 4.7 per cent.
OPEC has been successful in restraining oil production to support oil prices. Russia has been supporting these efforts and on Friday the country’s oil minister Alexander Novak said that the oil market was ‘not balanced yet’. In other words, the production agreement may have longer to run. In fact Russia’s Lukoil Chief Executive Vagit Alekperov said Russia should start to exit the oil production pact with OPEC if crude prices remain at US$70 a barrel for more than six months – still somewhere into the future.
Pump prices hit the highs of the discounting cycle in Sydney on January 8 and in Adelaide on January 13. Pump prices are approaching the low points of discounting cycles in both Melbourne and Brisbane. Perth prices are today at the low point of the weekly discounting cycle. Pump prices in Canberra, Hobart and Darwin continue to hold at $1.45-$1.50 a litre.
The rising oil price is the main source of inflation across the globe. In Australia, the petrol price lifted around 10 per cent in the December quarter – the biggest increase in 2½ years. The higher petrol price will add 0.35 percentage points to the quarterly change in the Consumer Price Index in the December quarter – the key inflation measure. We expect that the CPI rose 0.8 per cent in the quarter to be up 2 per cent over the year.
Fuel marketing groups have been successful in lifting the gross retail margin. The five-week average margin (gap between pump and terminal gate price) has hit a record high of 15.96 cents a litre. A year ago the gap was 11.23 cents.
What do the figures show?
Petrol prices
According to the Australian Institute of Petroleum, the national average Australian price of unleaded petrol rose by 0.9 cents to 137.6 cents a litre in the past week.
The metropolitan petrol price rose by 1.2 cents to 136.7 cents per litre and the regional price rose by 0.2 cents to 139.6 cents per litre.
Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 9.9 cents to 143.4 c/l), Melbourne (down by 4.9 cents to 131.5 c/l), Brisbane (down by 5.9 cents to 131.4 c/l), Adelaide (up by 13.3 cents to 137.5 c/l), Perth (unchanged at 137.6 c/l), Darwin (unchanged at 150.4 c/l), Canberra (down by 0.3 cents to 148.7 c/l) and Hobart (down by 0.2 cents to 146.2 c/l).
The national average Australian price of diesel petrol rose by 0.6 cents to 138.3 cents per litre. The metropolitan price rose by 0.5 cents to 138.9 c/l and the regional average price rose by 0.6 cents to 137.8 c/l.
Today, the national average wholesale (terminal gate) unleaded petrol price stands at 123.4 cents a litre, up by 0.4 cents over the week. The terminal gate diesel price stands at 126.2 cents a litre, up by 0.3 cents over the past week.
Last week the key Singapore gasoline price rose by US$1.45 or 1.9 per cent to US$78.00 a barrel. In Australian dollar terms the Singapore gasoline price last week rose by $1.49 or 1.5 per cent to $99.92 a barrel or 62.22 cents a litre.
MotorMouth records the following average retail prices for capital cities today: Sydney 141.4c; Melbourne128.9c; Brisbane 129.0c; Adelaide 144.8c; Perth 127.9c; Canberra 148.7c; Darwin 150.4c; Hobart 145.9c.
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.
What are the implications for interest rates and investors?
Filling up the car with petrol is one of the single biggest weekly purchases/costs of most families alongside the rent, mortgage and restaurant/take-away meals. The average family is spending around $200 a month to fill the car with petrol, up $20 a month compared with January last year.
Higher petrol prices, together with increases in child care fees, electricity tariffs and running costs on vehicles give the perception that living costs are rising significantly. In truth, declines in prices on a raft of other items means that living costs are restrained. But as always, families will be more fixated on what is rising in price, rather than what is falling.
The question is whether higher petrol prices boost transport costs more broadly together with wages. The lift in the average gross retail margin suggests that inflationary pressures may be emerging. But the Melbourne Institute monthly inflation gauge rose by just 0.1 per cent in December to stand 2.3 per cent higher over the year. It was the lowest annual increase in six months. The trimmed mean was up 2.2 per cent over the year.
While petrol-driven inflation needs to be watched, interest rate settings are considered unlikely to change until year end.
Originally published by Craig James, Chief Economist, CommSec
Petrol up 10% over December quarter
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