Pressure on government for budget update amid spiralling costs

The pressure is on the Federal Government to show it can make significant savings in next month’s budget update.

While holding the line that petrol prices are to blame for high inflation and not its spending, top ministers have still been instructed to cut costs.

As ships arrive on schedule, and with plenty of supply, it's the price of the oil they carry that's fuelling inflation concerns.

"We need the conflict in the Middle East to end because it is driving up fuel prices, not just in Australia, but right across the world," Environment Minister Murray Watt said.

In some signs of easing, oil prices plummeted 20 per cent in the days since the US midterm elections, with high hopes the Democrats' win will bring an end to the Iran War.

"If you mechanically translate that to petrol prices in Australia, is about 20 cents a litre," AMP's chief economist Shane Oliver told 9News.

"That's good news. The question is, is it gonna be sustained?"

That's the hope for Aussie motorists, with fuel costs up 23.6 per cent in the past in the past 12 months.

"It is a prime cause of the rising inflation that we've seen in Australia," Watt said.

But Shadow Treasurer Tim Wilson says petrol isn't the only reason.

"The key driver of inflation is government spending," Wilson claimed.

"That's what's pushing up underlying inflation, which is increasing interest rates."

Economists also say government spending is a part of the problem.

Despite the government pushing back on accusations its spending is part of Australia's inflation problem, it is still looking at savings options.

The Prime Minister has named greater 'efficiencies' in the public service as one way to rein in costs.

The minister in charge of the public sector earlier this week admitted an intended boost to the service hasn’t resulted in the drop in spending on external consultants that it was meant to.

"I have not seen enough change and so obviously this is an area that we're looking at doing further," Finance Minister Katy Gallagher said.

And she's not the only one. All Cabinet Ministers have been instructed to cut costs before next month.

"Every single minister in the government has been asked to find savings in their portfolios, just like we've been asked to do so in every budget update," Watt said.