$2 a litre here to stay as petrol pump records tumble

afr.com:

Record petrol prices are likely to rise even further and motorists should get used to paying more than $2 a litre as global oil prices continue to climb, further complicating the fight to tame persistently high inflation.

As pump prices hit fresh average highs in Sydney, Melbourne and Adelaide in the past two weeks and Brent crude oil prices edge closer to $US100 a barrel, industry sources say eye-watering prices could be here until the end of the year at least.

Prices for petrol and diesel have surged above $2 a litre. Dion Georgopoulous

The soaring prices contributed to an acceleration in annual inflation for the first time in four months, jumping 5.2 per cent in the year to August, up from 4.9 per cent in July. They have also added to pressure on households and small and medium-sized businesses, in particular, already stressed by the rising cost of living and doing business.

Markets are betting that the Reserve Bank is highly unlikely to raise the cash rate from 4.1 per cent when new governor Michele Bullock chairs her first monetary policy meeting next Tuesday. But factors including persistently high fuel prices mean markets and economists are predicting at least one more rate rise, and no cuts before the end of 2024.

Expectations of an extended period of sky-high fuel prices point to a crimping of discretionary demand for petrol, and what industry sources describe as “grade shifting” as motorists substitute cheaper grades for premium fuels.

“The $2 mark, I think, is definitely a bit of a psychological mark for people,” said Jevan Bouzo, head of the convenience and mobility business at Viva Energy, owner of the Shell network of petrol stations in Australia.

“Once you’re in the twos, people tend to think a lot more