Oil Price rise will affect consumer with a 4 billion headache and absorb the benefit of tax cuts

Prices of U.S oil

Morgan Stanley.


Morgan Stanley’s bank crunched figures showing that if the current prices are sustained for over 12 months it would represent a 0.3 percent drag on incomes and more than absorb the Federal Government’s proposed tax cuts.

One of the analyst from Morgan Stanley, Daniel Blake states that consumers were already facing a tough time with a negligible boost to household income from the federal budget until the 2020 financial year.

Higher prices at gas stations are part of the increasing squeeze on consumers. Mr. Blake says that the current policy setting point to greaters austerity.

Mr. Blake states that “Wages growth remains weak at 1.3- to- 2.1 per cent [year on year], compared with our assessment of ‘essentials’ costs at 3.1 percent, while additional headwinds from rising petrol prices emerge,”

The effect of the rising oil prices will be emphasized by the Australian dollar continuing to fail against the greenback, pushing the cost of imports.

On the Australian Institute of Petroleum figures, the average price of unleaded petrol has moved $1.33 cents per liter in over the past 12 months to the current level of $1.46 cents per liter.

“If sustained, this would add around 0.3 percentage points to inflation, and equate to around a A$3.7 billion ‘tax’ on consumers in FY19,” Mr Blake said.


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