AMP Capital chief economist Shane Oliver said that while it was unlikely that the average price of unleaded petrol would rise as high as $2 a litre, he wasn't ruling it out as a possibility.

"We're currently around $1.54 a litre, and Sydney is pushing into the $1.60s," said Dr Oliver. "To get to $2 a litre is conceivable at some point. On my numbers oil would probably have to push up to $US120 a barrel, which is possible if there's a major conflict in the Middle East, but I wouldn't bet on that happening any time soon."

While the price of Brent crude oil would need to jump by around 50 per cent from current levels to hit $US120, it would not need to advance much further to push the price of premium unleaded above $2 nationwide.

Coles Express petrol stations across Sydney and Melbourne were selling their premium unleaded fuel for 190.9¢ a litre on Monday, an unwelcome sight for many people who may be travelling for the school holidays. At Caltex stations across Darwin, the price of premium unleaded is also 190.9¢.

Commonwealth Bank senior economist Gareth Aird said that rising fuel prices are likely to put pressure on underlying inflation and could be a topic of discussion for the RBA.

The price of Tapis oil has risen for five consecutive quarters for the first time since 2008, giving little reprieve to petrol prices.

"From an interest rate perspective, it's something that the RBA will look at," he said. "What it tends to to do is have a [positive] short term impact on headline inflation but as a secondary impact it's disinflationary because household spending is reduced."

IFM Investors chief economist Alex Joiner said that the RBA would be concerned by the impact that higher fuel prices might have on discretionary spending.


"In inflation terms it is well known that the RBA will 'look through' the first round impacts on inflation that come from fuel prices," he said.

"If petrol prices are discussed it is likely the second round effects that take the focus. Unfortunately this is more art than science as the impact of fuel price, while having a cost impact on businesses and the consumer, is difficult to quantify."

Cost of living

Mr Joiner said that rising fuel costs only added to already tight cost of living pressures as petrol prices continued to climb.

"In an environment where consumers already feel that cost of living pressures are rising significantly but their wages aren't, there is inevitably a confidence impact from the sticker shock of high petrol prices. Most of us have driven past a service station recently and at least raised an eyebrow at prices that have rarely been seen before."

A 2015-16 Household Expenditure Survey conducted by the Australian Bureau of Statistics found that on average, households spent 2.7 per cent of their household budget on petrol alone. At the time the survey was conducted, petrol was averaging less than $1.20 a litre.