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Friday 9 December 2022

Fuel price pressures to ease

Fuel prices to ease

I'm travelling today, and it was very pleasing to see unleaded fuel at Sydney Airport from 166.9 cents (though diesel prices are still far too high).

We've been paying up to 230 cents per litre for unleaded fuel in Noosa at various times this year, so this is a welcome relief to see.

Gasoline prices have been falling precipitously in the US, so with the crude oil price back down at under $76 today - down from $122 in June - hopefully Australis should soon follow suit.

Used car prices and now rents are also now falling in real time in the US, so after the next 50 basis points hike over there it wouldn't be a surprise to see the narrative soon lurching back towards monetary policy easing in 2023. 

Trade slows a little

Back in Australia the international trade figures for October recorded a -7 per cent decline for fuel imports, although the total value remains a massive 90 per cent higher than a year earlier. 

This is the first sign of lower oil prices showing up in the international trade data, after a huge run-up. 

Exports also declined by -1 per cent in October, due to volatile gold export values, but natural gas exports notched another record high month at above A$10 billion.

For now at least, coal and iron ore export values are also running at very high levels. 

Tourism in Australia has rebounded from the pandemic shutdown, but the recovery stalled somewhat in October. 

With both imports and exports down in the month, the monthly trade surplus held up at around $12.2 billion.

The good news - fuel prices and used car prices should soon be in outright decline in Australia.

And we're running a very healthy trade surplus on today's high commodity prices. 

Australia has one more punchy inflation reading to be reported, on January 25th next year, but by the time March rolls around I expect the narrative to have shifted towards looming global recession risks and possible rate cuts.