Fuel prices fall for fourth month in a row but dark clouds loom, warns RAC
UK drivers who rely on diesel are still paying more at the pumps, despite diesel prices dropping for the fourth consecutive month, according to data from RAC Fuel Watch.
In February, the average price of a litre of unleaded petrol fell by 1.26p to 147.72p, while diesel dropped by 3.19p to 167.19p.
Although the drop in diesel prices is good news, wholesale price data indicates that diesel drivers are being overcharged with prices being 20p more than petrol despite there being only a 6p difference in wholesale prices.
According to the RAC, diesel drivers are paying around £7 more per tank than they should be if diesel was being sold at a fairer price of around 155p a litre.
Diesel prices may rise again unless Chancellor Rishi Sunak decides to keep the 5p duty cut that was put in place a year ago and cancel the annual planned hike at the Spring Budget on 15 March.
If the cut is removed, the RAC says that petrol prices would rise to 153.72p and diesel to 173.19p, factoring in VAT.
The RAC’s analysis indicates that although the average price of petrol is slightly lower than it was 12 months ago, the average price of diesel is significantly higher despite wholesale diesel prices being extremely similar to what they were a year ago.
The current situation is causing concern for UK households and businesses already struggling with the cost of living crisis.
The RAC has urged the Chancellor to consider households and businesses before raising prices by 5p on both fuels, which could have a detrimental effect on both inflation and the wider economy.
RAC fuel spokesman Simon Williams said:
“A reduction in pump prices would normally be extremely welcome news for drivers, not least in a cost-of-living crisis that is making the price of so many everyday items and services much more expensive than normal. But while our analysis shows drivers of petrol cars are paying a fair price at the pumps, the same sadly can’t be said for anyone whose vehicle runs on diesel.
“Retailers really ought to demonstrate they’re on the side of drivers by cutting their diesel prices now – not least as the wholesale price is on a par with where it was 12 months ago, yet the price they’re charging drivers at the pumps remains needlessly high.
“All eyes are now on what the Chancellor decides to do with fuel duty at the Budget in just two weeks’ time. While we accept the 5p cut introduced last year can’t last forever, with household finances under even more pressure this Spring than they were a year ago, we don’t think now is the time to be removing it.
“To decide to raise prices by 5p on both fuels would prove punishing to households and businesses struggling to make ends meet, and may have a detrimental effect on both inflation – which the Government is desperate to bring down – and the wider economy. In the case of diesel, it would also mean the UK has the highest fuel duty rate in the whole of Europe.
“We also hope Mr Hunt isn’t about to become the first Chancellor in 12 years not to cancel the annual planned fuel duty rise. If he were to go ahead with it, untold damage could be caused.”
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