Petrol prices are on the rise again, despite the efforts of the Morrison government to curb cost of living pressures at the bowser by slashing fuel excise for six months in the March budget.
The Australian Institute of Petroleum said the national average for petrol prices rose 9.3 cents to 178.2 cents a litre in the past week, the second weekly increase in a row, although still comfortably below the $2-mark at this stage.
Commonwealth Securities senior economist Ryan Felsman said international crude prices – which have the biggest influence of petrol prices – have been boosted by fears that supply will continue to be disrupted by the Ukrainian war.
“While COVID-19 lockdowns in China could weigh on crude demand, supporting prices is the increased likelihood that Germany will join other EU member states in an embargo on Russian oil,” he said.
A spread of new data also saw monthly house price growth slowing to a pace not seen since October 2020.
The CoreLogic national home value index rose just 0.6 per cent in April with the annual rate slowing to 16.7 per cent.
Economists say home prices risk going backwards in coming months if they are correct in expecting the Reserve Bank of Australia to start lifting the cash rate at Tuesday’s monthly board meeting.
Financial markets are fully priced for a 0.15 per cent rise in the cash rate to 0.25 per cent after annual inflation surged to 5.1 per cent.
The anticipated modest increase in the cash rate from a record low 0.1 per cent is expected to be followed by increases of 0.25 per cent in subsequent months.
“Having a near-zero cash rate when unemployment is four per cent and inflation is over five per cent makes no sense,” AMP chief economist Shane Oliver said.
“The experience from the late 1960s and 1970s tells us the longer high inflation persists the more inflation expectations will rise, making it even harder to get inflation back down again without engineering a recession.”
While rising interest rates may have a bearing on the election campaign, as they did in 2007 when then Liberal leader John Howard lost power, Prime Minister Scott Morrison still has a falling unemployment rate as part of his economic credentials.
While job advertising suffered a small fall in April, it still pointed to strong employment growth in the months ahead and a further decline in the unemployment rate.
The ANZ job ads series showed a 0.5 per cent fall in April, but was still 26.3 per cent higher than a year earlier and 57.3 per cent up from pre-COVID-19 levels.
“We expect strong labour demand to lead to solid employment gains in the coming months,” ANZ head of Australian economics David Planks said.
“We see the unemployment rate dropping well below four per cent in the second half of 2022, which should reinforce the momentum toward higher wages growth.”
March’s federal budget forecast the jobless rate falling to 3.75 per cent in coming months, the lowest in almost 50 years.
Industries such as manufacturing are being constrained by skill shortages, as well as input price pressures and rising wages costs, although the sector is still growing.
The Australian Industry Group performance of manufacturing index rose by a further 2.8 points in April to 58.5, its fastest pace since July 2015.
It was the third consecutive month above the key 50-point mark, which separates growth from contraction.
“New orders increased further in April and, with many businesses feeling capacity constraints and difficulties in securing inputs and staff, the pressures on filling orders are set to continue in coming months,” Ai Group chief executive Innes Willox said.