What happened
Geopolitical conflict and Middle East supply risks have pushed Brent crude oil higher, with Westpac expecting prices to average US$101 per barrel in the fourth quarter of 2026. Analysts forecast domestic fuel prices to surge 15 per cent in the quarter, potentially lifting December-quarter CPI by 1.3 per cent and delaying inflation's return to target.
Why it matters here
Higher fuel costs hit household budgets directly while increasing freight and operational expenses across Australian supply chains. Prolonged energy price spikes elevate headline CPI, compounding the Reserve Bank's inflation challenge and reducing the likelihood of interest rate relief for mortgage holders and corporate borrowers throughout 2027.
What to watch
Track Brent crude benchmarks and Australian retail fuel monitoring updates over the fourth quarter to evaluate upside risks to inflation forecasts.
Source
westpaciq.com.au