Chart of the month - June 2026

Ever since the US attacked Iran in late February, the price of oil has been like a rollercoaster. Australian businesses have been riding that rollercoaster and haven’t yet been thrown off track. In a special May survey by the Australian Bureau of Statistics, nearly half of businesses reported that they had absorbed rising ‌fuel costs. Only 11% passed on the cost to customers (see chart below). Customers are smiling, but so is the RBA, which will be happy to see that fuel prices aren’t flowing straight through to consumers and the CPI. And everyone will be happy that fuel prices have fallen since May!

Australia has kept fuel flowing

Since the survey in May, fuel costs have fallen and are now not too far from pre-war levels (see chart below). This should provide much-needed relief!

Fuel prices have fallen because the Australian government has done a good job diplomatically in securing fuel and oil supplies. It also identified problems with domestic distribution, which had led to localised shortages in March.

Source: Australian Institute of Petroleum

Like the rest of the world, Australia has also benefitted from US exports and withdrawals from its Strategic Petroleum Reserve, decreased Chinese demand, and persistent market optimism that the war will end soon. Hopefully, these can continue as long as needed.

Some businesses are doing it tough

While Australian businesses have been resilient in the face of rising fuel costs, it doesn’t mean that it has been easy. April and May were harrowing sd fuel prices peaked.

The survey in May found that 72% of those surveyed ‌had been negatively affected by higher fuel prices or low availability of fuel. Manufacturing businesses were the worst affected (see chart below).

50% of businesses reported that operating costs increased in the four weeks prior to the survey, with 82% citing increased fuel costs as a reason. 33% said they would struggle with financial commitments going into June.

However, only 17% of businesses reported delaying or cancelling capital investment plans because of the increased fuel costs. Further, only 16% were seeking assistance because of increased fuel costs. Australian businesses were feeling the pain, but few were wounded.

The fall in the fuel price since May will have taken the pressure off.

Final thoughts

Australian businesses have ridden out the worst of the fuel crisis. Further, the fall in fuel prices since May will have helped those businesses that were feeling the most pressure at the time of the May survey.

If the RBA sees that businesses and consumers are under too much pressure over the following months, it now has the ammunition to provide interest rate relief. This is because it struck early against rising inflation at the start of the year. In contrast, other countries now realise that they may have to raise rates!