Higher petrol costs may tighten household budgets and curb borrowing capacity
Australia’s competition regulator is stepping up scrutiny of fuel pricing as global crude oil markets react to instability in the Middle East, with potential consequences that extend to mortgage pricing.
The Australian Competition and Consumer Commission (ACCC) is examining recent movements in international refined petrol benchmarks and domestic pump prices, as well as market conduct, amid concern that higher fuel costs could feed through to broader consumer prices.
According to the ACCC’s latest petrol monitoring report, average retail petrol prices in the December quarter of 2025 rose in every capital city except Perth. Across Sydney, Melbourne, Brisbane, Adelaide and Perth, average prices were 180.4 cents per litre (cpl), an increase of 1.6cpl compared with the previous quarter.
Other capitals also experienced increases. Quarterly average retail petrol prices in Canberra, Hobart and Darwin were above the levels recorded in the preceding quarter. In regional areas, spanning more than 190 locations monitored by the ACCC, average prices were 180.6 cpl, 0.7 cpl higher than the previous quarter and 0.2 cpl above the combined average for the five largest cities.
The report indicates that much of the quarterly rise in the major centres reflected higher “other costs and margins” at the wholesale and retail levels, rather than international refined petrol prices alone. The gross indicative retail differences for the five largest cities averaged 17.9 cpl in the December quarter, 1.5 cpl more than in the September quarter.
Despite these recent increases, the ACCC found that average prices across 2025 were lower than in the previous year. Annual average retail petrol prices for the five largest cities were 179.3 cpl, 8.7 cpl below the 2024 average.
“The international price of refined petrol is a key driver of Australian retail petrol prices,” said ACCC commissioner Anna Brakey (pictured right). “While these international costs are largely outside the control of local petrol retailers, we remind retailers that making false or misleading statements to consumers about the reasons of price increases would be in breach of the Australian Consumer Law.
“The ACCC will not hesitate to take action if representations and market behaviour by a petrol company contravene competition and consumer laws. We have written to major fuel companies to set out our expectations about domestic fuel pricing as these international events unfold.”
For the mortgage industry, the trajectory of fuel prices is relevant beyond household transport costs. Higher petrol prices can add to headline and underlying inflation by lifting transport, distribution and input costs across the economy. If these pressures become persistent and broad-based, they may influence the RBA’s assessment of inflation returning to target.
Any upward adjustment in the RBA cash rate to contain inflation would flow through to variable mortgage rates and, over time, to fixed-rate pricing. This would affect new borrowing capacity, refinancing options and repayment burdens for existing borrowers, particularly those with high debt-to-income ratios or limited disposable income after essential expenses such as fuel.
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