Fuel prices are at a 16 month high due to increased demand from China and a global shortage of oil refineries.

Motorists are facing a rise of up to five cents a litre in the price of petrol and three cents for diesel after the main oil companies raised prices yesterday. Gull is the only company yet to move.

AA PetrolWatch spokesman Mark Stockdale says time will tell whether it is a spike or a sign of things to come.

"If there's an increase in demand, it's going to put pressure on prices. The expectation is that economies are now recovering and that's probably why we're seeing some of these increases."

The AA says the recent wavering exchange rate against the US dollar has also been a factor, although the kiwi has gained ground recently and is trading at more than 70 US cents today.