Highlights

  • Annual inflation rose to 4.3% in the year to September, with automotive fuel up 23.6%.
  • The government cut fuel excise to 20.6 cents a litre from 1 April 2026, and the cut has now expired.
  • The restored excise rate of about 53.7 cents a litre adds roughly $19.86 in excise to a 60-litre tank.
  • Fuel tax credit rates generally move with excise, so the end of the cut also affects business claims.

In April, excise on a litre of fuel stood at 20.6 cents. From 3 August it returned to about 53.7 cents, and prices have kept climbing since. Petrol is up 23.6% on a year ago, according to the September CPI released by the Australian Bureau of Statistics on 28 October. On the same morning, Treasury Secretary Jenny Wilkinson was reportedly telling Senate Estimates that the temporary cut had done its job. What follows traces how the cut worked, how it ended and what motorists face from here.

What the ABS figures show

Annual CPI inflation rose to 4.3% in the year to September, from 4.0% in August. Automotive fuel was the standout: up 9.4% in September after a 14.8% jump in August, leaving it 23.6% above a year earlier.

The ABS pointed to housing, at 5.2%, and transport, at 8.7%, among the main contributors to annual inflation, with fuel behind much of the transport rise. The trimmed mean, a gauge of underlying inflation, was 3.6%. Fuel is excluded from that measure, which helps explain the gap with the 4.3% headline.

What Treasury reportedly told Estimates

Wilkinson appeared before the Senate Economics Legislation Committee on 28 October. Accounts of the hearing say she described the temporary cut as having done its job and said it was ended to avoid adding to demand pressure. Those accounts paraphrase the evidence rather than quote an official transcript, and one referred to a "fuel tax rebate cut", which appears to mean the fuel excise cut. The Hansard proof transcript will give her exact words.

How the excise cut worked

Fuel excise is a federal tax charged per litre, normally indexed in February and August in line with CPI. From 1 April 2026 the government cut it from 52.6 cents a litre to 20.6 cents, a reduction of 32 cents. From 1 July the rate rose to 36.6 cents, leaving a 16-cent discount. The cut was predicted to cost $2.55 billion.

A 60-litre tank, in dollars

Consider a hypothetical driver filling a 60-litre tank. These figures cover the excise component only and ignore movements in the underlying fuel price. At the April rate of 20.6 cents, excise on 60 litres was $12.36. At about 53.7 cents, it is about $32.22, or roughly $19.86 more per tank.

GST is generally charged on the excise-inclusive pump price, so the difference at the bowser is about $21.85 once 10% GST is added. A weekly fill-up would stretch the full gap with the April rate to roughly $1,136 a year including GST, though that scenario assumes the April rate had continued all year, which was never the policy.

Fuel and the inflation debate

An analysis by Australia Institute economist Grudnoff found that stripping out the transport increase would bring annual CPI back to 3.5%, the level recorded in July. That suggests much of the latest jump comes from fuel rather than broad price pressure, although housing, electricity and insurance also rose.

At Estimates, Wilkinson said global events and private investment, including AI and data-centre spending, are the main inflation drivers. She also listed the Fuel Tax Credit among the drivers of government spending growth in 2024-25 and 2025-26. Fuel tax credits let eligible businesses claim back excise built into the price of fuel used in activities such as machinery and heavy vehicles, and credit rates generally move in line with excise rates.