Inflationary timebomb waits to explode

The Liberal-National Coalition's strategy to cut fuel excise by 22.1 cents per litre in April was only ever a short-term six-month political play.

Fuel prices across the country are again on the rise due to market forces beyond the control of the federal government, with average wholesale gasoil prices last week trending back up again and retail petrol prices following quickly thereafter.

Given the volatility of the international fuel market through key influences like the Ukraine war, it's a situation which has no upside.

The latest fuel industry data for last week put the national metropolitan average price for petrol at 166.7 cents per litre, just under half a cent higher than the week before.

At this rate at least half the downward pressure exerted by the excise cut will be soaked up by the time the six-month excise cut falls due for review.

Then, regardless of the outcome of the national election, there will be some very difficult fiscal decisions for the next government to make. An immediate return of the full 22.1 cents per litre excise at the retail level will send inflation-spiking shockwaves right around the country.

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There has to be a plan for mitigating that effect but in the midst of a hard-fought election campaign, neither side is talking about it.

Rising petrol price rises are already having a significant incremental effect on inflation, now at 5.1 per cent and rising.

The price of fuel has a major flow-on effect to Australia's cost of living.

Everything we consume has to be transported and, overwhelmingly, via the road network.

The data reveals there are no longer big efficiency gains to be in found in road transport freight and any additional cost pressures - including fuel - are now going to be quickly passed on, and reflected in retail prices.

That one key decision in April is ticking like an inflationary timebomb, with September when the timer winds down.

If there's a plan to prevent that bomb exploding, we deserve to hear it.

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