Three months of falling fuel prices could be about to end says RAC
UK drivers face the threat of rising petrol prices as the average cost of unleaded has started to inch up again, according to RAC Fuel Watch.
Despite three consecutive months of price drops, unleaded petrol finished January at 148.89p per litre – 3p lower than it began the month at 151.85p. Meanwhile, the average price of diesel dropped 4p from 174.37p to 170.37p, a price last seen in March 2022.
RAC fuel spokesman Simon Williams has warned drivers that although the monthly reductions in petrol and diesel prices were welcome, the first month of the year saw a rise in the wholesale price of both fuels by 2p and 3p respectively.
Analysts predict a rise in the price of oil to $90, due to increased demand from a re-opened China, which could result in petrol prices increasing to an average of 155p.
While the big four supermarkets – Asda, Morrisons, Sainsbury’s, and Tesco – have yet to raise their prices, Williams urged them to continue to stand firm and only increase pump prices if the wholesale price forces their hand.
The three months of lower wholesale prices starting from mid-October highlighted regional and local pricing disparities, often due to smaller retailers passing on savings while the supermarkets were reluctant to do the same.
Forecourt prices were generally cheaper in the North West, North East, Wales and Scotland, with Northern Ireland 4p cheaper than the UK average.
The Chancellor is set to deliver the Spring Budget next month, and Williams hopes that he will refrain from hiking fuel duty, which would increase inflationary pressure.
Simon Williams said: “Fuel prices fell for the 3rd consecutive month in January, but there is now cause for concern as petrol prices have started to rise slightly.”
“The monthly reductions of 3p for petrol and 4p for diesel were appreciated, but the wholesale prices of petrol and diesel increased by 2p and 3p respectively.”
“The fate of drivers at the pumps depends on the price of oil, and with the barrel consistently above $80 and predictions of a rise to $90, there is a risk of petrol prices rising back to an average of 155p.”
He said: “The Chancellor’s Spring Budget will also impact the prices. The big four supermarkets, which dominate fuel retailing in the UK, have not yet raised their prices in response to the slight rise in wholesale costs, and they are encouraged to continue not raising their prices unless necessary.”
“The recent lower wholesale prices highlighted regional and local pricing disparities, with smaller retailers passing on savings to customers while larger retailers were reluctant to do so.”
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