Australia: Surging inflation hits alcohol, cigarette, petrol prices in Australia

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Consumers who love a drink, a smoke or being able to drive somewhere have been hit with surging inflation.

Some popular items have gone up price by levels well beyond the consumer price index, indicating that the sharp increases in inflation in the US and other countries will soon take hold in Australia.

In the year to September, Australia's level of headline inflation rose by three per cent, putting it at the top of the Reserve Bank's two to three per cent target.

But items incurring the federal government's hated excises - colloquially known by economists as 'sin taxes' - have had the biggest price increases in the double-digits.

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Petrol prices during the past year have gone up by 24 per cent to new record highs.

The issue is so concerning Reserve Bank of Australia Governor Philip Lowe last week raised it in his 'Recent Trends in Inflation' speech.

Petrol prices across Australia

BRISBANE: 183 cents a litre

HOBART: 179.2 cents a litre

MELBOURNE: 177.3 cents a litre

CANBERRA: 171.6 cents a litre

PERTH: 171.1 cents a litre

DARWIN: 169.3 cents a litre

SYDNEY: 159.6 cents a litre

ADELAIDE: 154.6 cents a litre

Source: MotorMouth, November 2021

'The higher price of oil in global markets has also affected the headline inflation rate in Australia,' he said.

During the past week, unleaded prices across Australia have climbed by 1.7 cents a litre to 166.2 cents a litre, Australian Institute of Petroleum data showed.

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In some pricey postcodes of Australia's big cities, motorists are being slugged 190 cents a litre.

In Brisbane, petrol prices have climbed to a new record high of 183 cents a litre.

MotorMouth calculations show Melbourne is on track to hit new record highs later this week, surpassing the current average of 177.3 cents a litre.

CommSec senior economist Ryan Felsman said motorists last week paid an average of $232.68 for petrol last week, filling up a family car with a 35-litre tank.

While pricey, that was still below the record-high level of $237.20 level in late October.

'Filling up the car with petrol is one of the single biggest weekly purchases for consumers,' Mr Felsman said.

'Retail unleaded petrol prices remain elevated across Australia today.

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'Motorists should top-up rather than fill up their tanks.'

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Apart from crude oil prices, motorists also have to contend with paying 43.3 cents a litre in excise, following an increase on August 2.

Those increases have meant overall transport costs during the past year have surged by 10.4 per cent, as calculated by the Australian Bureau of Statistics.

Since the start of the pandemic in early 2020, used car prices have climbed by 36 per cent as many motorists opt for a pre-owned vehicle rather than waiting for a brand new car, Datium Insights data showed, as a shortage of semiconductors and Covid restrictions hamper global supply.

Alcohol and tobacco

Petrol is far from the only item to record bigger-than-average price increases with alcohol and tobacco going up by 4.4 per cent in the year to September, putting it above the ABS's consumer price index of 3 per cent.

Cigarette exercise is adjusted in March and September every year in line with the official measure of average weekly ordinary time earnings, which means a smoker is now paying $48.70 for a pack of Winfield 25s, now in drab olive packaging.

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This measure of wages increased by 1.4 per cent in the year to September,  taking the average full-time salary to $90,329.

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That increase also meant the tax per cigarettes increased by 1.4 per cent to $1.119 on September 1.

Alcohol taxes are also adjusted twice a year, but in February and August.

The excise is levied on the alcohol content in a drink not the overall cost of the beverage, so that means wine, spirits, beer, ciders and fortified wines are all taxed differently.

In the May Budget, Australia's smokers and drinkers were spared a tax hike for the first time in almost a decade.

Josh Frydenberg was the first Treasurer since 2012 to have avoided raising excise duty for some easy revenue, which meant the September quarter of 2021 was the first quarter since 2013 where there was no 12.5 per cent increase in tobacco excise.

Over three months, tobacco prices fell 2.4 per cent but over the year, they still went up by 9.8 per cent, with excise increasing in every other quarter of the previous 13 months.

Since 2013, both sides of politics had annually increased excise duty on tobacco and alcohol.

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A month before losing the election that year, former prime minister Kevin Rudd and his treasurer Chris Bowen announced Labor's intention to introduce an annual 12.5 per cent tobacco excise over the next four years.

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Smokers were hit just before Christmas 2013 followed by an annual sting on September 1 each year after that.

Mr Rudd's Liberal successors Tony Abbott and Malcolm Turnbull continued that policy, through their treasurers Joe Hockey and Scott Morrison.

Mr Frydenberg himself persisted with the annual 12.5 per cent excise increase in his 2019 and 2020 Budgets.

That means every treasurer during the past decade has increased excise.

In 2010 Labor's Wayne Swan, serving under Kevin Rudd, increased tobacco excise by 25 per cent from $0.2622 to $0.32775 per stick as part of a one-off revenue-raising measure after the worst of the Global Financial Crisis.

This was the first major increase in tobacco excise, beyond inflation, since the 1995 Budget when Paul Keating was prime minister and Ralph Willis was treasurer during an era when a 30-packet of Winfield Blues and Benson and Hedges cigarettes cost $6.50.

In 2021, a 25 pack of Marlboro Gold cigarettes costs close to $50.

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