Two of Australia's biggest banks have recorded spikes in spending at petrol stations since the US attacked Iran on February 28, sparking a war in the Middle East that has disrupted oil supplies.
Both say this will push inflation higher, heightening the case for further central bank interest rate rises this year, even as federal government fuel relief comes into effect on Wednesday.
In the week to March 21, fuel spending was 36 per cent higher than the average in February and 15 per cent higher than the same period of 2024, according to a report by National Australia Bank.
"Fuel prices have continued to increase since," NAB economists Gareth Spence and Taylor Nugent said.
They also noted a sharp rise in the number of fuel purchase transactions, which they linked to people buying petrol to get ahead of further price rises or supply issues.
"The supply disruptions in the Middle East represent a cost shock that will squeeze incomes and flow through to slower household consumption growth," they wrote.
This, in turn, will create demand issues for retailers and other consumer-facing businesses, which face their own fuel price-led cost increases.
Commonwealth Bank of Australia has also been watching consumer fuel spending.
"We've definitely seen the pick up in spending at petrol stations," CBA head of Australian economics Belinda Allen told a briefing on Tuesday.
At the start of the year, the price of a barrel of Brent crude oil was around $US60.
It's now above $US100, settling around $US105 on Wednesday, although it has traded as high as $US119.50 since the war began.
CBA's base case is for an oil price of around $US120 a barrel over the next three months, although it could jump as high as $US150, assuming the Middle East war drags on.
It could then fall back to around $US80 a barrel, if oil supply disruption is resolved.
The federal government has halved the fuel excise to 26.3 cents for three months, and removed the heavy vehicle road user charge for the same period.
But will halving the fuel excise be enough to get Australians through the crisis?
"We do not expect prices to go back to $US60 a barrel, like they were at the start of the year," CBA head of international economics Joe Capurso said.
"So when the excise goes back on in three months, petrol prices are going to be very high still."
Both NAB and the CBA expect the Reserve Bank of Australia to lift interest rates again, by 25 basis points, in May.
The government's fuel relief measures will cost around $2.6 billion and come ahead of the next federal budget to be handed down on May 11.
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