Inflation: Fuel tax change will add $20 to grocery bills and electricity prices will rise
Aussies are already feeling the pain at checkout – but a ‘perfect storm’ could be about to send prices skyrocketing.
The government has been accelerating its fuel tax cut for weeks – but one botched detail could send the cost of everyday basics skyrocketing.
That’s according to the trucking industry, which warned in a letter to Prime Minister Scott Morrison that scrapping the fuel tax credit – which was intended to ease cost-of-living pressures – could actually add $20 more to grocery bills.
“The food supply chain can only keep store shelves stocked if operators can make up for the loss of the tax credit,” Australian Trucking Association president David Smith wrote in the letter, obtained by news.com.au.
“They can only do that through a rate increase or a new fuel tax credit levy or other mechanisms.
“Unless this issue is addressed, it is estimated to add $20 per week to the average household food bill. This will negate the cost-of-living relief the government has sought to provide.
The Morrison government announced the fuel tax change on budget night in late March, revealing it would temporarily reduce fuel excise duty by 22 cents a liter in a bid to ease the pain felt by many Australians to the bowser.
Before the reduction came into force, the excise on fuel was 44.2c per litre, but truckers got a fuel tax credit of 17.8c per litre, which included a refund of the minus the government road user charge of 26.4c per liter.
But until the end of September, when the reduction expires, the fuel tax credit has been removed and the road user charge reduced to 22.1c – and lorry drivers only see a reduction of 4 .3c per liter on their diesel bills, which the industry says is unsustainable.
According to Mr Smith, these “unintended consequences” mean that the future of 53,000 trucking companies is now in limbo.
Meanwhile, the Coalition claimed the measure would save households an average of $700 – which would be all but wiped out if groceries were to rise by $20 as a result.
‘Perfect storm’ pushes prices up
However, the change in the fuel tax is not the only factor affecting the prices of basic necessities.
Grain growers are also feeling the pinch due to soaring fertilizer costs in addition to skyrocketing diesel and labor prices, with data from Thomas Elders Markets revealing that the cost of Australia’s fertilizer shipment had jumped $718 a tonne since last May as a result of the war in Ukraine and rising natural gas prices.
“With supply chain issues in China – which produces much of the world’s fertilizer – and now the war in Ukraine, it’s been a perfect storm,” GrainGrowers President Brett Hosking told 9 News.
This should reduce yields in the coming months, ultimately driving up prices for the consumer.
Theft explodes as prices soar
The rising cost of basic necessities is leading to an explosion in supermarket thefts as cost of living pressures push some into petty crime.
According to 9 News, there has been a huge increase in thefts in Melbourne in particular, with Sonsa Markets’ Lorenzo Perrone saying the rate of thefts have “definitely increased” recently – which is also forcing companies to raise prices to cover the loss.
In fact, Dominique Lamb of the National Retail Association confirmed that retail crime costs the industry $9 billion a year.
Electricity bill increased by $100
Meanwhile, the Australian Energy Market Operator’s latest report found Australians are likely to see a $100 rise in their energy bills after the election, after wholesale electricity prices more than doubled. over the past 12 months.
This means that when the annual electricity price reset on July 1 arrives, suppliers are almost guaranteed to raise prices if they haven’t already.
Mariam Gabaji, an energy expert at comparison site Finder, said now is the time to shop around.
“You have two different types of energy packages in the market: those that offer fixed tariffs for a certain period (like 12 months) or others that offer variable tariffs,” she explained.
“If you don’t like switching power plans often in search of the cheapest variable rates, you’ll probably get a fixed rate plan instead.
“However, keep in mind that one of the best ways to save energy is to switch energy providers. Finder analysis shows it could save you up to $415 per year .