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Hip pockets battered as costs bite

Expensive: Higher petrol prices hit family budgets. Picture: Ian Munro/The West Australian

Families are copping an expensive double whammy, at bowsers and in shopping centres, that threatens to get worse and undermine the economy.

Spiralling petrol prices are costing families at least $35 extra a month, while the failure of big banks to pass on interest rate cuts is reaping a $2.1 billion windfall at the expense of consumers.

Figures from the Australian Institute of Petroleum show that last week unleaded petrol in Perth averaged 136.8 cents a litre, a 0.2 cents increase over the previous week. It is the highest price since December.

Since the start of the year, however, average prices in the city have jumped more than 26 cents.

That 26 cents jump is equivalent to at least $35 a month. For families with two cars, the hit to the pocket is bigger than the savings from this year's cuts in interest rates.

In February, Reserve Bank governor Glenn Stevens directly referenced the benefit of falling petrol prices when announcing a rate cut.

The average price for a litre of unleaded in Perth was then just $1.10. In some cases, motorists could fill up for just $1 a litre.

Research by finance comparison website creditcardfinder.com.au shows people buying petrol with their credit cards are taking a particularly big hit.

It said that banks had failed to pass on to customers the interest rate cuts delivered since late 2011.

Banks have made an estimated $21 billion in interest charged on their credit cards since then. But if they had passed on the Reserve's rate cuts, they would have collected a more modest $18.9 billion.

The $2.1 billion has gone straight to the banks' bottom line.

"Credit card providers are clearly doing everything they can to hold on to their profit margins, as they're under greater pressure with cardholders being more responsible with their spending," finder.com.au finance expert Michelle Hutchinson said.

Since January, rates on 11 of 356 credit cards tracked by the company have fallen. But rates on 10 have increased.