Rising fuel prices driven by the war in the Middle East are intensifying cost-of-living pressures in remote Australia, with the Central Land Council calling on the federal government to urgently increase the remote area allowance (RAA).

Families in remote communities already face significantly higher costs for fuel and essential goods compared to those in metropolitan areas, despite existing government measures such as the essential food subsidy.

The latest surge in global fuel prices has compounded these challenges, with fears of supply chain disruptions and even fuel rationing adding to uncertainty.

In some remote regions, diesel prices have climbed to nearly $4 a litre, further widening the gap between city and remote living costs. Overall, expenses in these areas are estimated to be up to 40 per cent higher than in urban centres.

While the government recently introduced a low-cost food subsidy aimed at making 30 everyday items more affordable, rising fuel costs are undermining its impact, the CLC says.

This also puts downward pressure on the cost-of-living. The CLC argues that whilst the government's remote area allowance (RAA) is welcome, the increased prices wipe out the scheme's benefits.

General manager Dr Josie Douglas said the situation is placing unsustainable pressure on households already struggling to make ends meet.

"The subsidy helps, but fuel prices will quickly erode those savings," she says.

"Prices for key items like fresh food will rise sharply, and families will struggle to keep up."

The RAA is a supplementary payment provided to people in remote areas receiving government income support, intended to help offset higher living costs. More than half of the recipients are based in the Northern Territory.

However, the payment remains modest. According to the ATO, a single person receives an additional $18.20 per fortnight, while couples receive $15.60 each. Families can also receive $7.30 per fortnight for each dependent child.

Although the allowance is tax-free, it is not indexed to inflation and has rarely been increased in line with rising living costs. The CLC argues that this has left it out of step with current economic realities, particularly as remote communities face sharp price increases.

Many residents in remote regions rely on fixed incomes, limiting their ability to absorb further cost increases. Without an increase to the allowance, there is little protection for households against ongoing price shocks, the land council adds.

They are calling on the government to make cost-of-living a "priority".

"The last increase was more than 25 years ago. With fuel prices hitting our people so hard, it's time for the government to raise it," Dr Douglas said.

"Cost-of-living pressures are being felt nationwide, but low-income families in remote communities are bearing the brunt."

A Department of Social Services spokesperson told National Indigenous Times the government "understands the additional cost‑of‑living pressures faced by Australians living in remote and very remote locations," including challenges related to food security and fuel prices. They added the government is considering "ways to support households in these regions".

RAA recipients have "benefitted from increases to their primary income support payment or other supplementary payments, the latest of which started on Friday," the spokesperson said.

"For example, since the government was elected, the typical rate of JobSeeker Payment for a single person without dependent children has increased by $166.00 a fortnight. It is an increase of 25.5 per cent in almost four years, providing over $4,300 in additional support each year."