Treasurer rules out any relief from petrol price pain

Inflation's surprise rise in August

The federal government has ruled out any intervention to lower petrol prices despite inflation figures showing a steep rise in fuel costs.

Fuel prices rose 9.1 per cent in August and were also up 13.9 per cent over the past year, which contributed to a rise in overall inflation for the month from 4.9 per cent to 5.2 per cent.

The first rise in monthly inflation in four months has stoked fears the Reserve Bank could look to raise interest rates when it meets next Tuesday.

Treasurer Jim Chalmers said while petrol prices had risen, measures such as cutting the fuel excise as a way to lower costs were not on the cards.

“We’re doing [cost-of-living relief] in a way that takes some of the edge off inflation rather than adding to it,” Chalmers told ABC Radio on Thursday.

“Petrol prices have come up, that’s largely a consequence of a global shortfall. The oil producers have cut back, and when they do that, there are issues with supply and that pushes the price up.”

Despite the uptick in inflation, Chalmers said the figures were positive.

“One or two factors can have a really big impact in the monthly numbers and if you strip away the volatile items, then it’s a slightly more encouraging picture,” he said.

The Reserve Bank will cast a keen eye on economic data before its looming next interest rate decision. Retail trade and job vacancy figures that will be released on Thursday will provide further insight into how sticky inflation remains to the economy.

Chalmers said there would still be rises in monthly inflation in the future, but the broader picture was heading in the right direction.

“Inflation is moderating overall, we’ll get these bumpy and lumpy figures month to month from time to time, but it’s moderating overall,” he said.

“You can see that these interest rate rises that are already in the system are biting pretty hard.”

The Australian Bureau of Statistics pointed out inflation was actually moderating when volatile items – fruit, vegetables, fuel and holiday travel – were stripped out, dropping to 5.6 per cent from 5.8 per cent in July.

EY senior economist Paula Gadsby said RBA governor Michele Bullock was likely to look past the stronger fuel prices and keep rates on hold at her first board meeting on Tuesday.

“The risk of another rate hike remains, but our core expectation is that the Reserve Bank will sit tight,” she said.

NAB observed a slowdown in online retail sales for August, down 1.9 per cent relative to the previous 12 months.

If the figures are replicated for the broader retail sector, it could signal the RBA’s rate rises have had their intended effect and reinforce the argument the bank’s job is done.


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