Motorists have been warned that the prices of Petrol could reach record highs this year once the prices of oil continue to increase.
Economists worry that filling up at the forecourts could hit £1.40 per litre – nearly hitting the record levels that were last observed during the inflationary spike of 2012 when the price of oil abruptly hit £1.42. The prices of oil have increased by more than 50 percent in a year on global markets after it surged to a price of $77.10 from the $50 per barrel last June 2017.
The analysts at Oxford Economics have updated their forecasts. They currently believe that Brent crude could rise to a price of $85 per barrel before this year comes to an end.
This is anticipated to stop the recent decline in inflation in its tracks. The pressures in prices had been weakening as the pound strengthened and the larger costs from the previous year fell out of the annual calculations of the CPI.
Andrew Goodwin, an analyst from Oxford Economics, stated: “Those effects are pretty powerful, but the extent of increases in oil and domestic energy prices effectively means they offset each other for the next six months or so, and you end up with inflation staying where it is now, in the 2.5pc to 2.75pc range until the last part of the year.”
This will then feed into a series of prices in the United Kingdom and beyond, as the costs of fuel affect the wider economy.
The senior euro zone economist at BNP Paribas, Gizem Kara, stated: “The oil price now doesn’t affect ticket prices now because airlines are hedged for six to nine months, but you will see the impact later.”
He added: “The same applies to transportation costs. It will be added on to the final price. Even food prices might get higher.”