Petrol to rise back to $1.90 as food costs, interest rates feel the pressure
Consumers face a wall of new costs with the reprieve in petrol coming to an end, interest rates expected to rise and home building costs now up 8 per cent in a year.
Food costs were facing price pressures
Analysts said the increases were likely to add to the existing hike in food costs which would be put under pressure again because of the jump in transport costs. Rice and grain were also facing major cost increases.
CommSec noted that Australian households had been saving about $80 a month following the fall in fuel prices. The drop had been caused by declines in global oil prices and the Federal Government’s decision to halve the taxes on petrol for six months. Following the decision, petrol fell from about $2.20 a litre to recent prices around $1.50 to $1.60.
“The bad news for motorists is that Brent and Nymex crude oil prices lifted nearly 9 per cent last week,” CommSec said.
“The lift in global oil prices and the ending of the discounting cycle in Aussie capital cities could combine to push pump prices to near $1.80 – $1.90 again.”
Global grain prices are also high and were likely to put pressure on food costs and rising fertiliser prices were likely to lead to major fall in rice production in Asia which was likely to lead to price increases.
CoreLogic construction cost index for the March quarter showed national residential costs were up 9 per cent nationally and 8 per cent in Queensland.
Timber, metals and imported products were driving the increases and there was little hope for a reprieve in the short term.
CoreLogic’s Tim Lawless said the impacts would be felt by homebuyers but also those doing renovations. There was likely to be a flow-on to insurance costs because repairs were likely to be more expensive.
Colliers has also tipped a bump in the Brisbane unit market because of building costs.
Colliers said today that the cost of unit construction had jumped 30 per cent in Brisbane and developers were now tearing up pre-sale contracts because they were financially unviable.
“It’s left homebuyers utterly upset and disgruntled, particularly in what has become such a competitive market,” Colliers director of residential in Queensland Andrew Roubicek said.
“Just 18 months ago, a two-bedroom apartment in Brisbane might have sold off the plan for $9000 a square metre. But to build that apartment today the developer would need to achieve a sale price of $11,000 per square metre for the project to stake up.
“That’s a 20 per cent increase passed directly on to buyers.”