According to the RAC’s Fuel Watch January report, petrol prices fell for the seventh month in a row with the average price of diesel dipping by 5p a litre.

Despite oil reaching a 12-year low of $26 on Wednesday 20 January, the barrel price has rebounded, finishing the month at $33.12. This has caused the wholesale cost of both petrol and diesel to rise again.

The RAC said January was a landmark month for diesel as supermarkets cut the price to 99.9p a litre and later to below 98p which led to an average petrol-diesel price flip as it became cheaper than unleaded for the second time in six months (101.18p diesel v 101.86p petrol).

At the start of 2016 an average litre of diesel cost UK motorists 105.99p, but by the close of January this had fallen to 101.05p. As a result of the average 5p a litre diesel price reduction, the cost of filling a 55-litre family car came down by £2.72 to £55.58.

In contrast petrol only fell from 102.69p to 102.01p, though the average price seen at supermarkets stayed at 99.87p throughout January.

Wholesale costs rising 

RAC fuel spokesman Simon Williams said: “Motorists have seen petrol and diesel prices reach their lowest points since 2009. January saw the oil price go into free fall with talk of a barrel dropping to $20 and possibly even to $10, but since the low of $26 a barrel the market has started to creep back up. If this continues for a sustained period, wholesale costs will rise further which will in turn lead to pump price increases.”

Williams said that as the pound has weakened significantly against the dollar from $1.47 at the beginning of January to $1.42 by the end, this has undermined some of the benefit of the falling oil price.