Aussies brace for double hit amid fuel warning
With oil prices on the rise, petrol prices above $2 a litre could become entrenched.
Source: AAP
Dark clouds are gathering on the economic horizon, despite the addition of more than 76,000 jobs in June.
After the Australian Bureau of Statistics released another strong labour force report on Thursday, bonds traders ratcheted up expectations that the Reserve Bank will raise interest rates for a fourth time in 2026.
The market has now full priced in for a rate hike by Christmas. A few weeks ago it was a 50-50 bet.
The resurgence in rate fears is not all down to domestic factors.
Renewed hostilities in the Middle East have sent oil prices rising again and threaten to add fresh inflationary pressures to the economy.
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While next week’s June quarter inflation data will be crucial to the RBA’s next rates decision in August, the figures could already be dated by the time they are released.
Brent crude oil prices have risen from $US72 a barrel to more than $US96 a barrel in recent weeks.
As a rule of thumb, each dollar higher the benchmark oil price results in about a cent a litre increase in petrol prices at the bowser.
Along with 16 cents a litre being added to fuel prices from August 2 with the full resumption of the federal excise, commuters could soon again see petrol prices above $2 a litre.
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Economists at National Australia Bank warned that Australians might have to become accustomed to higher fuel prices.
“Recent developments in the Middle East show that the cost shock looks set to be less of a one-off spike and instead something that proves more grinding and protracted,” they said in a research note.
Although jobs growth has remained robust, at 4.4 per cent the unemployment rate is higher than the RBA’s June quarter forecast of 4.2 per cent. That implies the labour market is weaker than had been expected.
Commonwealth Bank head of Australian economics Belinda Allen said that while higher oil prices risked pushing inflation higher, they also posed risks for growth.
Victoria’s economy is leading the way down, with the state’s unemployment rate climbed to 5.1 per cent.
“That’s a warning sign that both the Allan and Albanese governments are failing to create the economic conditions businesses need to invest, grow and create jobs,” federal opposition employment spokesperson Jane Hume said.
—with AAP
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