I don't need to tell you that it's becoming more expensive to fill up the
car. Yesterday, when driving to the airport, the price per litre of petrol was
123.9 cents, four hours later, it had jumped to 139.9 cents.
Putting this in
a different context, based on a sixty litre tank which is used over a week's
driving, that petrol price increase equates to $9.60 more to fill up (per week),
or just shy of $500 extra per annum. Further assuming an average 30% tax rate,
that $500 equates to around $710 of pre-tax earnings.
So, piecing this
together, unless fuel prices go back down, in this case you've suffered a pay
cut of $710. Ouch.
And translating this to a real estate context, this is
about the same as a quarter of a percent increase in interest rates on a
$275,000 mortgage (from 6.25% to 6.5%).
The point to note then is that even
though interest rates are not going up at the moment, the loss of earnings as a
result of the higher cost of oil is having an equivalent effect for many
people.