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What does it all mean?

• Somewhat remarkably, petrol prices in all the capital cities with discounting cycles are at, or near, their cyclical low points. Average pump prices in Sydney, Melbourne, Brisbane and Adelaide are all currently below 140 cents a litre. At the same time wholesale prices are around 132 cents a litre. So motorists would do well to fill up, rather than top up. Sydney, Melbourne and Brisbane prices have been falling for at least 16 days while Adelaide prices have been falling for just 12 days.

• The record weekly fall in petrol prices is more of a quirk – an alignment in the discounting ‘planets’. Only a fortnight earlier, Australian petrol prices jumped by 9 cents a litre in a week.

• The bad news for motorists is that the Singapore gasoline priced spiked higher last week. And in Australia wholesale (terminal gate) prices have risen for the past four days. So pump prices may be back in the 160-170 cent range later in the week. Petrol is the single biggest purchase made by most families each week. And higher prices serve to reduce consumer interest in discretionary, or non-essential, purchases.

• A record 1.46 million numbers of tourists came to our shores from China in the year to September – a doubling in tourist numbers over the past six years. On average these Chinese tourists stay in Australia for 13 days, and thus provide a solid contribution to the income of Aussie businesses while they are here.
What do the figures show?

Petrol prices

• According to the Australian Institute of Petroleum, the national average price of unleaded petrol fell by 9.1 cents in the past week to 143.1 cents a litre. The metropolitan price fell by 12.8 cents to 141.3 cents a litre, and the regional price fell by 1.6 cents to 146.6 cents a litre.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (down by 15.9 cents to 138.1c/l), Melbourne (down by 11.6 cents to 144.5 c/l), Brisbane (down by 16.5 cents to 139.8 c/l), Adelaide (down by 23 cents to 138.6 c/l), Perth (down by 1.2 cents to 141.9 c/l), Darwin (down by 1.3 cents to 143.8 c/l), Canberra (down by 0.4 cents to 147.6 c/l) and Hobart (down by 0.1 cent to 155.9 c/l).

• The smoothed gross retail margin for unleaded petrol fell from a 3½ month high of 14.1 cents a litre to 13.77 cents a litre (24-month average: 13.1 cents a litre).

• The national average diesel petrol price fell by 0.2 cents to 149.5 cents a litre over the week. The metropolitan price fell by 0.3 cents to 148.2 cents a litre and the regional price also fell by 0.2 cents to 150.6 cents a litre.

• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 132.4 cents a litre, up by 1.6 cents over the week. The terminal gate diesel price stands at 135.4 cents a litre, down by 1.7 cents over the past week.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 132.9c; Melbourne 139.8c; Brisbane 133.9c; Adelaide 130.6c; Perth 132.8c; Canberra 147.5c; Darwin 143.4c; Hobart 155.9c.

• The key Singapore gasoline price rose by US$7.45 last week (10.7 per cent) to US$76.95 a barrel – the biggest percentage gain in 32 months. In Australian dollar terms, the Singapore gasoline price rose by $11.18 (11.1 per cent) to $111.83 a barrel or a 4-week high of 70.33 cents a litre.

Tourism

• Tourist arrivals fell by 2.6 per cent in September after rising by 2.7 per cent in August. Arrivals are up 2.5 per cent on the year.

• Aussie tourist departures were flat in September after rising by 1.5 per cent in August. Departures are up 3.2 per cent on the year.

• In September, tourists from Greater China (China and Hong Kong) totalled 152,500 (mainland China 125,400; Hong Kong 27,100), ahead of New Zealand (116,900).

• Mainland China is the largest source of tourists to Australia. Over the past year a record 1,462,500 tourists came to Australia from China, up by 2.1 per cent on the year earlier.

• A record 388,300 Indian tourists travelled to Australia over the year to September, up by 12.0 per cent on a year ago.

• In September, there were record tourist inflows from New Caledonia, Vanuatu, Bangladesh, Pakistan, Sri Lanka and Colombia. Over the year there was a 22.3 per cent lift in tourists to South Australia, 20.7 per cent lift in tourists to the Northern Territory and 17.5 per cent lift in tourists to the ACT.

• And in the month of September a record number of Aussies travelled to Indonesia, Japan and South Korea. The number of travellers to Japan was up by 21.3 per cent on the year.

Migration

• In September, there were 58,320 permanent and long-term arrivals in Australia. The annual number of permanent and long-term overseas arrivals rose from 846,510 in August to 847,010 in September, up by 2.9 per cent over the year.

• In net terms (arrivals less departures) permanent and long-term overseas arrivals totalled 299,870 over the year to September – a 5½ -year high but still below the record high of 353,480 in the year to April 2009.
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 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 Australian Bureau of Statistics releases data on overseas arrivals and departures, produced monthly and is an indicator of the health of the tourism sector. The figures are also useful in understanding spending trends and tracking migrant numbers – an indicator with widespread implications for employment, housing and spending.
What are the implications for interest rates and investors?

• Consumers are reluctant to spend. Some Aussies are getting less interest income from bank deposits. Some are still adjusting to wage growth of 2.0-2.5 per cent. Others are spooked by the record low level of interest rates. And motorists are contending with volatile prices at the petrol pump. So spending has been trimmed. Tough times for retailers are expected to continue.

• The main positives are tax cuts, recent increases to the minimum wage, relatively low jobless rate and the fact that real wages are still increasing (wages are rising at a faster rate than prices).

• A near record number of tourists are coming to Australia and they are generally staying longer – it is an impressive combination that is adding spending momentum to the economy.

Published by Craig James, Chief Economist, CommSec