Fuel Prices Jump 9.4% in One Month: Chalmers Rules Out Open-Ended Excise Relief as Pressure Builds on the Budget

Aditi Sarkar

29 October 2026 09:03 PM AEDT

Fuel Prices Jump 9.4% in One Month: Chalmers Rules Out Open-Ended Excise Relief as Pressure Builds on the Budget

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Highlights

ABS data showed automotive fuel prices rose 9.4% in September 2026 and 23.6% over the year, contributing to annual CPI inflation of 4.3%.
Treasurer Chalmers said the budget "can't afford to do that forever" when asked about a return of the fuel excise discount.
The cash rate reached 4.60% after a unanimous 25 basis point rise at the late-September meeting, the fourth increase of 2026.
Markets were pricing an 87% chance of another rate rise at the 3 November Reserve Bank meeting.

Treasurer Jim Chalmers has played down any return of the fuel excise discount even as pump prices climb sharply. Australian Bureau of Statistics data released on 28 October 2026 showed fuel prices rose 9.4% in September alone and 23.6% over the year. Chalmers said the budget "can't afford to do that forever," drawing pressure from the Opposition, the crossbench and Treasury's own acknowledgment that private demand has been stronger than expected.

What the September Inflation Figures Showed

The ABS monthly Consumer Price Index showed annual inflation of 4.3% in the 12 months to September 2026, up from 4.0% in August. Annual trimmed mean inflation was 3.6%. Fuel was the standout: automotive fuel prices rose 9.4% in the month, attributed to higher world oil prices. The 23.6% annual rise was the main contributor to an 8.7% increase in transport costs. Underlying inflation for the September quarter was 3.7%, above the Reserve Bank's August forecast of 3.5%.

What Chalmers Said and What He Did Not

Chalmers did not formally rule out further relief but played down the prospect. He said the war in the Middle East was "absolutely turbocharging" inflation. He also pushed back against claims that government spending was to blame, saying that for every $5 of demand, $4 is private and $1 is public. Treasury Secretary Jenny Wilkinson told Senate Estimates that recent budget updates had reduced deficits, taking "some pressure" out of the economy. Assistant Treasurer Daniel Mulino said the government is "continuing to find savings" but gave no specifics.

Why Excise Relief Is Harder to Fund

Fuel excise is a shrinking revenue line. The PBO's 2026-27 Medium-Term Budget Outlook projects total excise falling from 1.3% to 1.1% of GDP over the decade, mainly as electric vehicles take a larger share of the fleet. The same outlook puts the underlying cash deficit at 1.0% of GDP in 2026-27, with surpluses only from 2034-35. Any temporary excise cut would widen the deficit for as long as it lasted, unless offset elsewhere. Excise relief also works directly against inflation figures in the short term by lowering measured fuel prices - and prices jump back when it ends.

FAQs

Q: What was the previous fuel excise relief and when did it end?

A: The source article does not give details of the previous fuel excise discount or when it ended. It refers to a reprieve as something that "can't be afforded forever" without specifying dates.

Q: How does fuel excise directly affect the CPI?

A: Fuel excise forms part of the cost of automotive fuel. A cut in excise lowers pump prices, which directly reduces the fuel component of the CPI. When the cut ends, prices rise again. That is why the timing of any excise change matters both for the budget and for the Reserve Bank's assessment of inflation.

Q: What interest rate did the Reserve Bank set in late September 2026?

A: The Reserve Bank raised the cash rate by 25 basis points at its late-September meeting, the fourth increase of 2026, taking the rate to 4.60%. The decision was unanimous.

Q: Can businesses claim fuel costs as a tax deduction?

A: Fuel and vehicle costs incurred in carrying on a business are generally deductible, subject to the rules on substantiation and private-use apportionment. A registered tax agent can help with how rising fuel costs flow through to a business's records and deductions.

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