Gains from interest rate cut 'would be swallowed by fuel price increases'

If the Reserve Bank of Australia (RBA) decides to reduce interest rates at its next meeting in November, the savings Aussies make could be negated by the rising cost of fuel, it has been suggested.

The need to have money in savings accounts could be heightened as the cost of fuel rises, with data from revealing that the average weekly price of unleaded petrol soared yesterday to 154.9 cents per litre, reports the Herald Sun.

This is 30 cents higher than one year ago and could equate to drivers having to pay an additional $21 to fill a 70-litre tank.

If the RBA reduces interest rates by 25 basis points as expected, people with an average mortgage of $300,000 could be set to save $50 a month, but this may be swallowed by the high cost of fuel.

Earlier this week, chief economist for UBS in Sydney Scott Haslem told the Australian that the Reserve Bank is likely to maintain interest rates for the rest of year in light of retail figures showing 0.6 per cent growth in August.

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