Household Bills
‘Pump price shock’ for drivers as 5p fuel duty cut to unwind this month
Fuel prices have fallen for four months in a row but drivers are in for a “pump price shock” as the 5p fuel duty cut introduced a year ago is set to come to an end this March.
The price of unleaded came down by 1.26p to 147.72p a litre, while diesel dropped 3.19p to 167.19p a litre in February.
For those filling up a 55-litre family car, petrol drivers have seen the cost fall from £81.94 to £81.25, while for diesel drivers, it’s down to £91.95 from £93.71 at the start of February.
The RAC said that while this is good news for the 12 million diesel drivers, diesel remains “seriously over-priced” at forecourts.
They are paying a “colossal” 20p more than for petrol with RAC calculations showing it costs around £7 more per tank than it should, as there’s just a 6p difference between wholesale and forecourt prices. The motoring group said diesel should be sold at a fairer price of around 155p a litre.
And in less than two weeks in the Spring Budget on 15 March, all drivers face a “pump price shock” unless the Chancellor decides to keep the 5p fuel duty cut announced a year ago.
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Average petrol prices are currently slightly lower than they were 12 months ago – 147.72p compared to 151.16p – while diesel stands at 167.19p, compared to 154.75p last year.
If the duty is unwound as expected, the RAC said petrol prices would rise to 153.72p while diesel would hit 173.19p once VAT is factored in.
‘5p cut can’t last forever’
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.”
The highest fuel duty in Europe
Williams added that a decision to raise prices by 5p on both fuels “would prove punishing to households and businesses struggling to make ends meet”, and may also 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,” Williams said.