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maker.
Motorists rescued by high Aussie dollar
Weekly petrol prices
- According
to the Australian Institute of Petroleum, the national average
Australian price of unleaded petrol rose by 0.5 cents per litre to 144.6
cents a litre in the week to May 1 – equalling the highest
level in 30 months.
- If
the Aussie dollar had remained at parity with the greenback as it was
at the start of 2011, Aussie motorists would now be paying more than 11
cents more per litre for petrol, thus forking out around an
extra $8 to fill up the car with petrol.
- Global
oil prices continued to rise over the past week. In Australia the
terminal gate (wholesale) price hit fresh 30-month highs. Despite the
strong Aussie dollar, local pump prices look set to lift by 1-2
cents a litre over the coming week and by 3-5 cents a litre over the
next 2-3 weeks.
What does it all mean?
- Exporters
and investors may not like our soaring currency, but the Aussie dollar
is clearly the motorist’s friend. If the Aussie dollar had remained at
parity with the greenback as it was at the start of the
year, then motorists would be paying more than 11 cents more per litre
to fill up the car with petrol.
- The
bad news is that the Aussie dollar can only do so much to protect
Aussie motorists. The global oil price continues to soar in response to
stronger Asian demand and geopolitical jitters in North Africa and
the Middle East. Over the past week alone, the Singapore gasoline price
rose by over $5 a barrel in local currency terms, translating to around 5
cents more per litre.
- The
local petrol price will keep ticking higher in the short-term, keeping
consumers cautious about their spending habits and enticing them to
scour for bargains. Retailers will remain under pressure in this
environment.
- Spare a
thought for those motorists that have to fill up with diesel, rather
than unleaded petrol. Over the past three months the diesel price has
risen by 18 cents a litre while unleaded fuel has gone up by
around 10 cents a litre.
What do the figures show?
Petrol prices:
- According
to the Australian Institute of Petroleum, the national average
Australian price of unleaded petrol rose by 0.5 cents a litre to 144.6
cents a litre in the week to May 1. The metropolitan price rose
by 0.6 c/l to 144.0 c/l, while the regional average price rose by 0.1
c/l to 145.6 c/l.
- Average
petrol prices across states over the past week were: Sydney (up 0.5
cents to 145.4 c/l), Melbourne (unchanged at 143.1 c/l), Brisbane (down
2.7 cents to 144.9 c/l), Adelaide (up 0.8 cents to 138.1 c/l),
Perth (up 0.4 cents to 144.8 c/l), Darwin (up 1.2 cents to 150.7 c/l),
Canberra (down 0.7 cents to 145.6 c/l) and Hobart (up 0.6 cents to 149.8
c/l).
- The national
average wholesale (terminal gate) rose to a fresh 30-month high of
137.6 cents a litre today, up by 0.9 cents a litre over the past week.
- Last
week, the key Singapore unleaded petrol price rose by US$7.11 (5.4 per
cent) to US$138.35 a barrel. In Australian dollar terms the Singapore
gasoline price rose by a $5.06 (4.2 per cent) over the week to
$126.93 a barrel.
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. 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.
What are the implications for interest rates and investors?
- The
Reserve Bank will have to ‘look through’ the higher petrol price as it
is doing with fruit and vegetable prices. In short, there is nothing the
Reserve Bank can do about rising world oil prices. But while
higher petrol prices boost inflation, they also take dollars out of
consumer pockets, entrenching the discounting mentality of retailers.
- We
don’t expect the Reserve Bank to lift rates until later in the year.
The RBA must disentangle a variety of influences such as retailer
discounting, a stronger currency, flood-induced increases in food prices
and higher world oil prices. At present, underlying inflation is under
control at the bottom-end of the RBA 2-3 per cent target zone.
