Australian households are facing two cost-of-living pressures at the same time: petrol prices heading toward $2 a litre and a possible new interest rate rise, with the Reserve Bank of Australia (RBA) due to make its next call on August 11.

The RBA is Australia's central bank. One of its main jobs is setting the "cash rate" — a benchmark interest rate that influences what banks charge people for home loans and business loans. When the RBA raises this rate, monthly mortgage payments typically go up. Financial markets see about a 50-50 chance the RBA will raise the rate for a fourth time at its August meeting, according to The Guardian. The ASX RBA Rate Tracker, a tool that tracks market expectations, shows a 37% chance of a small increase — a quarter of a percentage point — to 4.60% (ASX). The current rate is 4.35%, set at the RBA's May 2026 meeting (RBA). The next update is due at 2:30 pm on August 11.

Behind the petrol pressure is a sharp jump in oil prices. The global benchmark for oil, called Brent crude, rose 37% in July 2026, according to The Guardian. The New York Times reported Brent topped $100 a barrel on July 24 before falling 3.9% to $96.78 that same day (NYT). Ideastream Public Media said the $100 mark was breached because of a new escalation in the Middle East (Ideastream).

Two conflicts are squeezing the world's oil supply at the same time. The Guardian reports that Houthi forces have been blocking Saudi Arabian oil shipments through the Red Sea, while Ukraine has been striking Russian energy infrastructure. Both actions limit how much oil is available. Warwick McKibbin, an economist at the Australian National University, said oil prices were likely to stay high for at least a year.

At the petrol station, unleaded fuel cost $1.80 per litre in late July, up from about $1.50 at the start of the month, according to fuel-price tracker Motormouth. Diesel prices rose about 50 cents in July to roughly $2.20 per litre across major East Coast cities. InDaily SA reported that petrol above $2 a litre could become a lasting reality (InDaily), while News.com.au noted that a temporary cut to the fuel tax is ending, which will push prices back above $2 within weeks (News.com.au).

The fuel tax — called the fuel excise — is a charge the government adds to every litre of petrol and diesel. Earlier, the government reduced this tax to give drivers some relief. But that discount has been shrinking and is set to disappear entirely after August 2. Once the full tax comes back, petrol prices will rise further, though exactly how much depends on what happens to oil prices through August.

The RBA's decision is complicated because the economic signals are mixed. Sally Auld, chief economist at NAB, said inflation (the rate at which prices rise across the economy) remained too high but was slightly below what the RBA had forecast. Unemployment was also a little higher than expected. Auld believed that combination — inflation easing and unemployment rising — would persuade the RBA to keep rates unchanged. Johnathan McMenamin, a senior economist at Barrenjoey, was also quoted in The Guardian's reporting, which drew on named economists from ANU, Barrenjoey, and NAB rather than repurposing another outlet's scoop.

This isn't the first time oil prices have surged in 2026. In March, oil rose above $100 a barrel for the first time since 2022, driven by the Iran war (The Guardian. President Trump said then that the US-Israel war with Iran was "very complete," after which oil prices fell to $85 a barrel. By mid-March, Yahoo Finance reported prices holding above $100 as the Strait of Hormuz — a narrow waterway that carries a large share of the world's oil — remained essentially closed to through traffic. The Guardian's July 25 article links to a July 22 piece on RBA rate rises and US-Iran war market forecasts, connecting the geopolitical and monetary-policy threads.

The broader context here is that the RBA is trying to manage a wave of price increases that started overseas but flows directly into what Australians pay for fuel and everyday goods. The RBA's May rate hike to 4.35% already showed concern about stubborn inflation. A new oil spike could create the same price-pressure problem the bank has been trying to solve, just as the job market shows signs of weakening. The gap between Auld's expectation and the market's pricing reflects real uncertainty: will the RBA see a fuel-driven price bump as temporary, or as a sign of a deeper problem that needs a rate rise to fix?

For households and businesses, the timing makes things harder. Fuel costs are rising as the fuel tax discount ends, and mortgage repayments may go up if the RBA raises rates in August. With unemployment already climbing above forecast, the RBA's August 11 decision could be one of the most important it makes in this cycle of rate increases.