An economist is warning rising petrol prices could potentially lead to interest rates increasing once again - bad news as people continue to battle a cost-of-living crisis.
Fuel prices are on track to break records this summer, with some experts predicting the price of 91 octane will climb to $3.50 by Christmas. The increasing prices come almost three months after the Government's 25-cent fuel tax subsidy ended.
Milford Asset Management portfolio manager Felix Fok told AM on Thursday a big reason for the increasing petrol prices is down to Russia's invasion of Ukraine.
"In general, they've exhibited this pattern where following the Russia-Ukraine situation, last year there was a spike. International oil prices went as high as US$120 a barrel but it has been moderating, calming down, receding," he said.
"Earlier this year it went as low as US$70 a barrel but, within about three months, it rebounded to about US$95 a barrel. So that jump of $25 has been the recent development.
"As for why, I think the classic commodity equation of supply and demand. The supply side has always been controlled given there is this big organisation of petroleum exporting countries aka OPEC led by Saudi Arabia."
It has led to fears it could see mortgage and interest rates rise yet again as Kiwis continue to battle a cost-of-living crisis.
Fok told AM co-host Ryan Bridge if general inflationary pressures stay high, then Kiwis will need to get used to living with high interest rates.
"Now, to what extent will oil prices be considered when central bankers around the world gather? Well, there's a weighting of energy within the CPI (consumer price index) calculation that's not actually that high," he said.
"But it's also true that fuel energy feeds into freight and manufacturing processes so there is actually a genuine look for exposure to higher energy prices beyond the weighting in the mathematical calculations, but we need to look at other aspects more holistically like jobs, employment."
AA motoring affairs principal policy advisor Terry Collins told Newshub rising oil prices, a weak New Zealand dollar and the closure of the Marsden Point Oil Refinery are putting pressure on prices here.
"When you see $95 for a barrel, that's for October contracts, so we're yet to see those prices flow through," Collins said.
He said the "so-called" national average for 91 Octane is currently sitting about $3.10.
"I think by Christmas we will see it closer to $3.50 than we'll see it to $3," Collins said, well and truly surpassing records.
Watch the full interview with Felix Fox in the video above.