Australian Households Bracing for Higher Interest Rates and Petrol Prices

Australia's households face the possibility of higher interest rates and petrol prices exceeding $2 per litre, according to economists.

The Reserve Bank of Australia (RBA) may increase its cash rate for a fourth time at its next meeting on August 11, with financial markets now giving an even chance of this occurring.

Warwick McKibbin, director of the ANU's Centre for Applied Macroeconomic Analysis, stated that crude oil prices are likely to remain elevated for 'at least a year' due to the escalating Middle East crisis.

The ongoing conflict has pushed global crude back above $US100 per barrel, further increasing pressure on petrol prices. The phasing down of fuel tax relief and a 37% jump in international Brent crude have driven unleaded petrol to $1.80 per litre, up from $1.50 earlier this month.

Senior economist Johnathan McMenamin predicts that unleaded petrol will return above $2 per litre over the coming weeks. Diesel prices are currently at around $2.20 per litre in major East Coast cities.