Diesel and petrol prices are moving to a more traditional price spread after a tumultuous 2022.
COST-OF-LIVING pressure really started to bite last year, with consumer price statistics for the December 2022 quarter indicating how expensive particular items have become over the last year.
Two important categories that form a key component of consumers’ everyday spend are food and fuel. An assessment of price gains over the year highlights that, while many categories of food have become expensive over 2022, they pale into insignificance when we measure the rising cost of fuel.
Price gains across most categories of food between 5 and 10 per cent and were relatively common, with a handful of categories stretching a few percentage points beyond 10 per cent. In contrast, the cost of fuel skyrocketed by nearly 24 per cent over the 2022 season.
The largest annual price gains were for vegetables, which were up by 12.6 per cent year on year, despite prices easing over the December quarter.
Milk pricing took out second place for costliest price rises, with an increase of 10.9 per cent.
Coffee-tea and beef battled it out for third costliest price gains in 2022, up by 10 per cent and 9.8 per cent, respectively, while pork was affected least by inflationary pressures, with prices up by just 4 per cent over 2022.
An assessment of the change in consumer prices over the final quarter of 2022 shows there is a glimmer of hope for shoppers, with some categories of food demonstrating deflationary pressures.
Fruit prices also eased, coming off 2.9 per cent over the final quarter of 2022.
The fall in the cost of lamb nearly matched the price easing seen for the fruit category, with lamb prices down by 2.5 per cent. (Good timing to slap some lamb on the barbecue before the summer warmth turns to an autumn chill.)
Meanwhile, beef eased marginally (0.3 per cent), but at least it wasn’t a price rise.
Sadly, cheese prices continued to climb over the December quarter, up by 6.4 per cent from the previous quarter.
Fuel prices mirrored the cheese trend and continued to grind higher over the final quarter of 2022 adding 2.2 per cent to the price gains seen throughout the year.
Anyone closely watching the fuel price may have noted that while petrol prices have stayed firm, the price of diesel has begun to show some deflationary signals.
The average national diesel price (as reported at the import terminal) has fallen in recent months, in line with the fall in global crude oil pricing. Average national diesel pricing at the import terminal has moved back under $2 per litre.
It’s odd to think that these prices are a bit of a relief when the reality is that the average price of diesel over the past decade was about $1.30 per litre.
It just goes to show how quickly perceptions on price can change.
Historically, diesel pricing would often range between a 10 per cent discount to a 10 per cent premium when compared to petrol pricing.
During 2022 the premium spread of diesel increased to nearly 30 per cent above petrol pricing, which is pretty uncharacteristic.
In recent months the diesel-to-petrol spread has moved back to a more normal situation, currently sitting at a 9 per cent price premium to petrol at a national level.
It is important to clarify that the pricing at the import terminal reflects the wholesale pricing, not the pricing being achieved at the service station.
Nevertheless, it is a promising sign that the price trend for diesel is on a deflationary trajectory, so it is only a matter of time before we see this trend mirrored at the retail level.
As already reported, some categories of food are already showing signs that inflationary pressures are being diluted, so fingers crossed that 2023 proves to be a happier year for the Aussie consumer when it comes to key purchase items like food and fuel.
- Matt Dalgleish is co-founder and director of Episode 3 (EP3)
