A crude price spike does not hit the household budget all at once. It moves through the economy in a sequence, starting at the petrol pump and ending, eventually, in the inflation figures.
Brent crude, the global oil benchmark, is back above US$100 a barrel as conflict in the Middle East drags on. It settled around US$104 on Friday 25 September 2026, after touching roughly US$107 the day before. For Australian households, the question is less where oil goes next than how, and how quickly, it reaches their spending. The answer comes in stages.
First, the bowser. Australian fuel is priced off international benchmarks, principally the Singapore refined price. According to the Australian Competition and Consumer Commission (ACCC), changes in those benchmarks take around two weeks to work through to the pump in the capital cities, and longer in the regions.
That lag has already played out. In the week to 23 September 2026, average petrol prices across the five largest cities rose 6 per cent to A$2.37 a litre, and diesel rose 7 per cent to A$2.87, according to ACCC monitoring. Compared with pre-conflict levels on 20 February 2026, petrol is 66 cents a litre dearer and diesel A$1.10 dearer.
AMP chief economist Shane Oliver argues pump prices have run ahead of crude. "Petrol prices in Australia at around $2.39/litre have now caught up with and overshot the rise in oil prices," he wrote in his weekly note. The risk runs the other way too. "A failure to resolve the crisis could see oil head to $US150/barrel and petrol prices head above $2.70/litre."
Second, freight. Diesel is the fuel that moves trucks, trains and farm machinery, and it has risen much further than petrol. Freight operators generally pass higher fuel costs on through surcharges and contract resets, which takes weeks to months rather than days. That flows into the cost of getting goods onto shelves, groceries included. Food and non-alcoholic drink prices were already up 3.2 per cent in the year to July, according to the Australian Bureau of Statistics (ABS).
Third, flights. Jet fuel is one of an airline's largest costs, and airlines reprice quickly. Qantas lifted international fares in March 2026, when the conflict first sent prices soaring, saying jet fuel prices had risen by up to 150 per cent over the preceding fortnight.
Finally, the inflation numbers. Automotive fuel prices rose 7.5 per cent in July alone, according to the ABS, after three months of falls. The September figures, due late October, will capture more of the latest surge. Fuel's direct effect on the headline rate shows up quickly. The indirect effects, through freight, food and travel, take longer and are harder for the Reserve Bank of Australia (RBA) to see coming.
That is why the RBA cares. Higher fuel costs lift inflation directly and can seep into the prices of almost everything else. With underlying inflation already above its 2 to 3 per cent target, an oil shock makes it harder for the board to stop raising the cash rate.
There is a counter-argument. Oil spikes can fade quickly, and a short burst above US$100 may leave little lasting mark if supply fears ease. Oliver's own point, that petrol has overshot, suggests some relief at the pump could come even if crude holds steady.
The MPJ Takeaway
The petrol price is the part everyone notices. For the wider economy the bigger story is diesel, up A$1.10 a litre since February against 66 cents for petrol, quietly feeding into what everything else costs. If Brent stays above US$100 through October, we expect that to show up in grocery and travel prices by the end of the year, and to keep the RBA on edge well into 2027. For young renters without a car, the pain arrives later but it still arrives, through food, deliveries and flights. The practical moves are unglamorous. Fill up at the bottom of the weekly price cycle, book any summer flights sooner rather than later, and budget for groceries creeping up.
Brent crude, the global oil benchmark, is back above US$100 a barrel as conflict in the Middle East drags on. It settled around US$104 on Friday 25 September 2026, after touching roughly US$107 the day before. For Australian households, the question is less where oil goes next than how, and how quickly, it reaches their spending. The answer comes in stages.
First, the bowser. Australian fuel is priced off international benchmarks, principally the Singapore refined price. According to the Australian Competition and Consumer Commission (ACCC), changes in those benchmarks take around two weeks to work through to the pump in the capital cities, and longer in the regions.
That lag has already played out. In the week to 23 September 2026, average petrol prices across the five largest cities rose 6 per cent to A$2.37 a litre, and diesel rose 7 per cent to A$2.87, according to ACCC monitoring. Compared with pre-conflict levels on 20 February 2026, petrol is 66 cents a litre dearer and diesel A$1.10 dearer.
AMP chief economist Shane Oliver argues pump prices have run ahead of crude. "Petrol prices in Australia at around $2.39/litre have now caught up with and overshot the rise in oil prices," he wrote in his weekly note. The risk runs the other way too. "A failure to resolve the crisis could see oil head to $US150/barrel and petrol prices head above $2.70/litre."
Second, freight. Diesel is the fuel that moves trucks, trains and farm machinery, and it has risen much further than petrol. Freight operators generally pass higher fuel costs on through surcharges and contract resets, which takes weeks to months rather than days. That flows into the cost of getting goods onto shelves, groceries included. Food and non-alcoholic drink prices were already up 3.2 per cent in the year to July, according to the Australian Bureau of Statistics (ABS).
Third, flights. Jet fuel is one of an airline's largest costs, and airlines reprice quickly. Qantas lifted international fares in March 2026, when the conflict first sent prices soaring, saying jet fuel prices had risen by up to 150 per cent over the preceding fortnight.
Finally, the inflation numbers. Automotive fuel prices rose 7.5 per cent in July alone, according to the ABS, after three months of falls. The September figures, due late October, will capture more of the latest surge. Fuel's direct effect on the headline rate shows up quickly. The indirect effects, through freight, food and travel, take longer and are harder for the Reserve Bank of Australia (RBA) to see coming.
That is why the RBA cares. Higher fuel costs lift inflation directly and can seep into the prices of almost everything else. With underlying inflation already above its 2 to 3 per cent target, an oil shock makes it harder for the board to stop raising the cash rate.
There is a counter-argument. Oil spikes can fade quickly, and a short burst above US$100 may leave little lasting mark if supply fears ease. Oliver's own point, that petrol has overshot, suggests some relief at the pump could come even if crude holds steady.
The MPJ Takeaway
The petrol price is the part everyone notices. For the wider economy the bigger story is diesel, up A$1.10 a litre since February against 66 cents for petrol, quietly feeding into what everything else costs. If Brent stays above US$100 through October, we expect that to show up in grocery and travel prices by the end of the year, and to keep the RBA on edge well into 2027. For young renters without a car, the pain arrives later but it still arrives, through food, deliveries and flights. The practical moves are unglamorous. Fill up at the bottom of the weekly price cycle, book any summer flights sooner rather than later, and budget for groceries creeping up.