‘Clear and present danger’: fuel prices could rise by 30c a litre across Australia under IMF scenario
IMF’s World Economic Outlook shows how a worsening Middle East crisis could affect global growth and inflation
An International Monetary Fund scenario where global oil prices jump to $US130 a barrel over coming months could push Australian petrol prices up by another 30 cents and pile pressure on the Reserve Bank to hike interest rates, economists say.
In its latest World Economic Outlook, the IMF modelled the impact on global growth and inflation from a worsening Middle East crisis that extended into next year, highlighting the “clear and present danger” to a resilient global economy from turmoil in commodity and bond markets.
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The Reserve Bank of Australia delivered a fourth interest rate hike last month.
"The RBA delivered a fourth interest rate hike last month."
The IMF modelled a scenario in which oil prices reach $US130 a barrel from the fourth quarter of 2026 to the first quarter of 2027.
"With limited scope for further inventory drawdown, oil prices reach $US130 from the fourth quarter of 2026 to the first quarter of 2027."
Australian petrol prices could rise by 30 cents a litre under the IMF's $US130 oil price scenario.
"An International Monetary Fund scenario where global oil prices jump to $US130 a barrel over coming months could push Australian petrol prices up by another 30 cents and pile pressure on the Reserve Bank to hike interest rates, economists say."
RBA board members noted the Middle East conflict had escalated and oil prices were substantially above the level assumed in the August forecasts.
"the Middle East conflict had escalated and oil prices were substantially above the level assumed in the August forecasts"
Jonathan McMenamin expected inflation to lift to 4.2% in the year to September.
"Jonathan McMenamin, head of economic forecasts at Barrenjoey, said he expected inflation to lift to 4.2% in the year to September, against 4% in August."
Unleaded petrol prices in major east coast cities have pushed above $2.40 a litre in recent days.
"Unleaded petrol prices in the major east coast cities have pushed above $2.40 a litre in recent days and towards six-month highs, while diesel prices have eased but remain high at about $2.80."
The RBA's prediction of headline inflation falling to 3.6% by the end of the year is based on Brent crude falling to $US81.
"The RBA's prediction of a fall in headline inflation to 3.6% by the end of the year is based on the Brent crude price falling to $US81."