Australia faces fuel price rise as temporary excise cut expires

Australia's federal government let a halved fuel excise tax lapse at the end of June, meaning pump prices could climb as the full levy returns on July 1. Prime Minister Anthony Albanese signaled the possibility of extending the cut, but the three‑month relief cost the budget about A$5.5 billion in lost revenue and has drawn criticism for being a blunt, regressive measure.

Westpac economists warn that, if the US‑Iran cease‑fire negotiations stall, Australian diesel could reach A$3.07 per litre and petrol A$2.68 by year‑end, pushing headline inflation close to 6 percent. The bank projects that once the excise resumes, prices will stay high before easing below A$2 per litre in 2027 under more optimistic scenarios. Higher fuel costs are expected to strain household disposable income and could dampen consumer spending and business investment.