Oil surge could push price at pump to near record level
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.”