Oil surge could push price at pump to near record level

The Sunday Telegraph - Money & Business - - Front page - By Tim Wal­lace

PETROL prices could hit record highs this year if oil prices keep on soar­ing, mo­torists have been warned.

Econ­o­mists fear fill­ing up at the fore­courts could ap­proach £1.40 per litre – al­most hit­ting the record lev­els seen in the in­fla­tion­ary spike of 2012 when the price briefly hit £1.42. Oil prices have risen by more than 50pc in a year on global mar­kets, jump­ing from $50 per bar­rel last June to $77.10 now.

An­a­lysts at Ox­ford Eco­nom­ics have up­graded their fore­casts and now be­lieve Brent crude could rise to $85 per bar­rel be­fore the end of the year.

This is set to stop the re­cent fall in in­fla­tion in its tracks. Price pres­sures had been fad­ing as the pound strength­ened and higher costs from last year fell out of the an­nual CPI cal­cu­la­tions.

“Those ef­fects are pretty pow­er­ful, but the ex­tent of in­creases in oil and do­mes­tic en­ergy prices ef­fec­tively means they off­set each other for the next six months or so, and you end up with in­fla­tion stay­ing where it is now, in the 2.5pc to 2.75pc range un­til the last part of the year,” said An­drew Good­win at Ox­ford Eco­nom­ics.

This will feed into a range of prices in the UK and be­yond, as fuel costs hit the wider econ­omy. “The oil price now doesn’t af­fect ticket prices now be­cause air­lines are hedged for six to nine months, but you will see the im­pact later,” said Gizem Kara, se­nior euro­zone econ­o­mist at BNP Paribas. “The same ap­plies to trans­porta­tion costs. It will be added on to the fi­nal price. Even food prices might get higher.”

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.