Supermarkets slash diesel prices by over 7p litre amid competition concerns

Supermarkets across the UK have significantly reduced the price of diesel in response to concerns raised by the Competition and Markets Authority (CMA), according to an analysis conducted by the RAC.

The move comes after the CMA expressed worries about diminishing competition in the retail fuel market, specifically highlighting the increase in average supermarket margins compared to 2019.

In the two weeks following the CMA’s road fuel market study update on May 15th, the average price of a litre of diesel at supermarkets dropped by 7.44p, falling from 151.02p to 143.58p.

This decline indicates that major retailers, including supermarkets, have acted swiftly to address the CMA’s concerns and restore a competitive pricing environment.

The RAC has been advocating for significant reductions in diesel prices since the end of March when the wholesale price of diesel fell below that of petrol.

Despite supermarkets maintaining a relatively stable unleaded petrol price of around 143p per litre throughout April, the average price of diesel at their sites remained stubbornly high, dropping by only 10p per litre (161.4p to 151.02p) in the month leading up to the CMA’s announcement.

Prior to the CMA’s intervention, the disparity between the average prices of petrol and diesel at supermarkets stood at 9p per litre.

However, within weeks, this difference had diminished to a mere 2.5p, indicating that the retailers had been spurred into action by the CMA’s scrutiny.

Nevertheless, the RAC argues that supermarket diesel prices should ideally be around 6p per litre lower than their current levels (137p) if a fair pricing strategy were implemented.

Comparatively, the UK-wide average price of diesel currently stands at 147.44p per litre, with unleaded petrol priced at 143.14p per litre, reflecting a gap of more than 4p.

However, throughout April, this gap averaged 14p per litre despite diesel being 4p cheaper than petrol on the wholesale market. At present, the average price of a litre of unleaded petrol at supermarkets is 140.64p, while diesel is slightly more expensive at 143.14p.

Simon Williams, fuel spokesman for the RAC, emphasised the impact of the CMA’s announcement on retailers’ pricing strategies, stating, “Since the Competition and Markets Authority made its announcement about supermarkets increasing their margins compared to three years ago and said they will be formally interviewing bosses, it appears the rate at which the price of diesel has fallen has sped up.”

Williams further added, “Even today, with 27p having come off the average price of supermarket diesel since the start of the year, diesel drivers are continuing to get a poor deal.” He called for fairer pricing practices, particularly since retailers have been purchasing diesel at a lower wholesale price than petrol for the past two months.

The RAC spokesperson also expressed hope that the CMA’s review, expected to be released within the next four weeks, would lead to improved value for consumers at the pumps.

The RAC suggested an alternative for drivers seeking better fuel prices, pointing to Costco as a viable option.

According to their analysis, the membership-only retailer is currently offering petrol at an average price of just 134.5p per litre and diesel at 136p per litre, providing potential savings for eligible members.