Fuel Prices Expected to Rise as Excise Cut Ends

The federal government's fuel excise cut ends tonight, July 31st, and prices at the pump are expected to rise. The excise rate will also undergo its twice-yearly inflation indexation, increasing from 20.6 cents a litre to 53.7 cents a litre.

When the excise was first reduced in April from 52.6 cents per litre to 20.6 cents per litre, it provided a 32 cent discount on wholesale fuel prices. However, with the rate now lifted to 36.6 cents a litre, the discount at the pump is reduced to 16 cents a litre.

Treasurer Jim Chalmers confirmed that the excise cut will end as planned, despite potential escalation in the Middle East impacting the oil market.

Economists have warned since March that the excise cut was not a good idea over the long term, predicting it would cost Australian taxpayers $2.55 billion and increase inflation. Scott French, senior lecturer in economics at the University of New South Wales, said interfering with fuel prices is 'not the best way to offer relief', as it can encourage drivers to use more fuel.