Fuel costs reach the farm gate long before the CPI

Troy Armstrong, founder and senior adviser at Larapinta Private, has urged families on the land to plan for an extended run of expensive diesel, with the cost flowing into freight and food well before it registers in the official inflation figures.

In October 2026, diesel trades at around 33 cents a litre above petrol. For agricultural families, that premium lands on one of the largest bills in the farm budget, and it shows up in the operating accounts long before a quarterly CPI print can capture it.

For advisers with regional and pastoral clients, the timing has practical weight. A cash flow plan built around headline inflation can understate the pressure a farming family feels in a fuel shock, because the cost hits the business first and the household second.

A long road ahead

Armstrong believes the shock still has a long way to run. He points to the war, which has knocked out refining capacity that will take years to replace. A supply deal with Russia covers only about an eighth of what has been lost, and because Australia imports most of its fuel, he sees the country as more exposed than the US.

The effect reaches well beyond the bowser.

“Almost everything in this country spends part of its life on a truck, and that cost works its way into freight and food well before it shows up in a CPI print.”

The point extends beyond agricultural clients. Retirees and other households on fixed incomes in regional towns feel higher freight costs at the checkout, which gives advisers a useful prompt to revisit the spending assumptions in a client’s cash flow plan.

On a working property, he explains, the cost compounds, since a cropping operation pays for diesel twice.

“On a cropping place, diesel is one of the biggest bills of the year. You pay it at the pump, then you pay it again in the freight on fertiliser and feed. I would budget for it staying high rather than hoping it passes.”

That approach suits the way many advisers already work with agricultural clients, where seasonal cash flow, input costs and succession plans all draw on the same balance sheet. Treating a higher fuel bill as part of the base case gives a family more room to plan with confidence.

Floating over fixed

Armstrong also links the fuel shock to the broader rate outlook. He sees it adding to the pressure that keeps interest rates high, and that view shapes where he wants income to come from.

Floating-rate securities pay a coupon that resets in line with a benchmark rate, so their income adjusts as rates move. For clients who draw a regular income from their portfolio, a coupon that rises with rates can help that income keep pace. Speaking in October 2026, Armstrong makes the case for that flexibility.

“I would rather be paid floating than fixed right now. If yields keep climbing, a floating rate coupon climbs with them.

“But floating rate won’t save you from a borrower who can’t pay, and Australian bonds above 5 per cent will be worth locking in eventually, just not yet.”

His view brings two ideas together. Floating-rate exposure lets income rise alongside yields, while the quality of the borrower remains the foundation of any income allocation. By keeping fixed-rate Australian bonds on his watch list, Armstrong positions the stance as a timing call he expects to revisit as yields move.

Larapinta Private works with Australia’s regional, agricultural and pastoral families, bringing institutional expertise together with a specialist’s understanding of life on the land.

For the families it serves, Armstrong’s message is a practical one. Plan for diesel to stay dear, and keep the income side of the portfolio ready to move with rates.