The recent drop in petrol prices has afforded consumers more disposable income which begs the question, how will they spend that extra cash?
In Melbourne the average price for unleaded petrol in February 2014 was $1.53 per litre, compared to $0.96 per litre in February 2016, a fall of more than 37%. This sharp drop in price is large enough to make more money available for discretionary spending. If the 8.3 million occupied households in Australia purchase an average usage of 40 litres of petrol per week and can now do so for $0.50c per litre less, that equates to $20 per week per household and $166m of additional available national expenditure per week. The freshlogic Mealpulse panel confirms that the average household is spending $30 a week on fruit & vegetables, so this additional $20 is a significant amount.
Since this insight has been compiled, the petrol prices have eased back up to $1.10 litre, but most forecasts are expecting strong global supply to maintain the pressure on prices and generate the expected household savings.
While the petrol retailing Convenience stores will get the first chance to capture this additional cash it is also likely to find its way into other retail and food service channels.