Petrol prices eased slightly last week despite expectations that the reinstated fuel excise tax would be starting to flow through.
The average retail price across the country fell by 3.9 cents last week to 178.6 cents a litre, the weekly Australian Institute of Petroleum report said.
Unleaded fuel prices fell in Sydney, Canberra, Melbourne, Brisbane, Adelaide and Perth but lifted in Canberra, Darwin and Hobart.
CommSec’s Craig James said retail fuel prices were behaving somewhat unusually, and expected prices to be lifting as fuel cycles in most cities left the discounting phase and the fuel excise tax was reinstalled.
Some retailers were charging less than the cost price, he said, which was not a sustainable strategy in the long term.
But he said discounting cycles were hard to predict and not necessarily the same length each time – ranging anywhere between 18 and 50 days.
The end of the fuel excise discount was also anticipated to add more than 20 cents to the price at the pump once retailers worked through their supplies of discounted fuel.
However, Mr James suspected the Australian Competition and Consumer Commission’s monitoring efforts were stopping servos from hiking prices unnecessarily high.
The treasurer asked the consumer watchdog to keep an eye on retailers when the fuel excise tax was reinstated last month.
Oil markets are also bouncing all over the place.
Global oil prices fell by three to four per cent on Friday, which followed a two per cent lift the day before.
Mr James said oil markets were reacting to competing developments.
On the one hand, the threat of a global recession caused by interest rate hikes has oil markets worried about lower demand, which is putting downwards pressure on prices.
On the other hand, the commitment by oil exporting countries, known as OPEC+, to slash oil production is pushing prices up.
“The world could benefit from lower oil prices, a development that would help restrain transport and distribution costs,” he said.
“But we will have to wait and see which way the tug-o-war goes.”
Despite volatile oil prices casting a shadow over efforts to tame inflation, Treasurer Jim Chalmers hopes Australia can avoid a recession due to its strong economic fundamentals.
Having returned from talks in Washington DC, Dr Chalmers said the global economy was on a “perilous path” when it came to the prospect of another global downturn.
“It’s our hope that Australia can avoid a recession,” Dr Chalmers told reporters in Canberra on Monday .
“We have low unemployment, we’ve got relatively solid growth, relatively solid demand.
“We’ve got good prices … for our commodities around the world with a positive impact of that on the budget.”
But he said the nation would not be “completely spared another global downturn”.
Treasury has already downgraded its forecasts for major trading partners ahead of the October budget, with the department now predicting the US economy to grow by one per cent rather than 2.5 per cent next year.
The department has downgraded the UK’s annual growth rate from a two per cent lift to a fall of a quarter of a percentage point.
Treasury has also downgraded its European Union and China growth forecasts substantially and shaved a full percentage point off global growth projections.
In March, the department expected the global economy to grow by 3.75 per cent. It’s now predicting 2.75 per cent growth.
“Our best defence against uncertainty around the world is a responsible budget at home, and that’s what I’ll be handing down next week,” Dr Chalmers said.
Extracted from Sheppnews.com.au