Petrol Prices Up 17c in a Week: What Rising Fuel Costs Mean for Your Budget and Borrowing Power

Fuel Prices Are Climbing Fast

Australian petrol prices rose 17 cents per litre in the week to 10 March 2026, according to Australian Institute of Petroleum data. That’s one of the sharpest weekly increases in recent memory, driven by a 25% surge in global oil prices linked to the ongoing conflict in the Middle East.

For a family filling a 60-litre tank once a week, that’s an extra $10 per fill, or roughly $520 a year, on top of prices that were already elevated.

Why This Matters Beyond the Bowser

Rising fuel costs have a compounding effect on household finances. It’s not just what you pay at the pump. Transport costs flow through to the price of groceries, deliveries, and services. When diesel gets more expensive, so does everything that moves by truck.

For households already stretched by higher mortgage repayments after the RBA’s February rate hike to 3.85%, fuel costs add another layer of pressure. The Westpac consumer confidence index for March came in at just 91.6, a reading that still signals more pessimism than optimism among households.

The Borrowing Power Impact

Here’s something many borrowers don’t realise: lenders include your estimated living expenses, including transport, when calculating how much you can borrow. The Household Expenditure Measure (HEM) benchmarks that banks use are periodically updated to reflect real cost changes.

If you’re applying for a home loan or looking to refinance during a period of elevated fuel prices, your borrowing capacity could be lower than you expect. This is particularly relevant for borrowers with long commutes in outer suburban or regional areas.

A rough guide: for every $100 per month increase in declared living expenses, your maximum borrowing capacity drops by approximately $15,000 to $20,000, depending on the lender and interest rate.

What You Can Do

If you’re an existing borrower:

• Review your budget. Track actual fuel spending for a month and compare it to what you assumed when you took out your loan.
• If mortgage stress is building, talk to your lender early. Most banks offer hardship provisions before you fall behind on payments.
• Consider whether refinancing to a lower rate could offset some of the cost-of-living pressure.

If you’re looking to buy:

• Be realistic about transport costs in your serviceability calculations. Buying further out might save on the purchase price but cost significantly more in fuel.
• Factor in current fuel prices, not last year’s averages, when estimating your household budget for lenders.

For everyone:

• Use apps like FuelCheck or Petrol Spy to find the cheapest fuel in your area.
• Fill up early in the weekly price cycle (typically Tuesday or Wednesday in most capital cities).
• If you’re due for a car change, consider the fuel efficiency of your next vehicle as a genuine financial decision.

The Bigger Picture

NAB senior economist Taylor Nugent has warned that if fuel prices don’t reverse quickly, they could add enough to the March quarter CPI to push trimmed mean inflation to 0.9% for Q1 2026. That’s the kind of reading that would make a further RBA rate hike in May almost certain.

In other words, the pain at the pump today could lead to even higher mortgage rates tomorrow.

Need help reviewing your mortgage or household budget? A financial adviser or mortgage broker can help you stress-test your finances against rising costs. Find a qualified professional on WealthWorks.