Australians are being warned that the escalating conflict in the Middle East could deepen the nation’s cost of living pressures, with higher petrol prices expected to flow through to mortgages, groceries and other household expenses. Economists say fears that Iran could disrupt oil shipments through a కీల trade route have already pushed up global oil prices, with local pump prices tipped to rise by as much as 40 cents a litre within days.

A sustained increase of that size would add roughly 0.8 percentage points to headline inflation and cost the average household about 14 dollars more per week on fuel alone. Higher fuel costs typically feed into the Consumer Price Index and can quickly spread to transport, freight and supermarket prices, compounding existing inflationary pressures.

While the Reserve Bank of Australia may initially look through a short term oil driven spike, analysts warn that a prolonged disruption could delay the return of inflation to its 2 to 3 per cent target range and increase the risk of further interest rate rises. Some economists caution that a severe or extended oil shock could also drag down share markets and superannuation balances, raising the risk of a broader economic slowdown if energy prices surge dramatically.