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Pump prices fall 9p in July – one of the biggest reductions in 20 years

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Written by:
03/08/2022
Drivers saved £5 filling up their tanks in July as the average price of petrol and diesel fell back from their record highs. But the price cuts “still don’t fairly reflect the fall in the wholesale price of fuel”, according to The RAC.

The average price of petrol fell in July by nearly 9p (8.74p) to 182.69p a litre. This meant drivers shaved £5 off the cost of filling a 55-litre tank of petrol, taking the price from £105.29 down to £100.48.

Meanwhile, the RAC revealed diesel came down by almost 7p (6.69p), from 199.07p at the start of the month to 192.38p a litre by the end of the month. This meant drivers saved £3.68 filling up – £109.41 down to £105.81.

While these represent the third and fourth biggest monthly reductions in the last 20 years, the RAC said the cuts “still don’t fairly reflect the fall in the wholesale price of fuel”. As such, it said major retailers should be cutting pump prices much further.

In fact, the wholesale cost of petrol has fallen for eight consecutive weeks by 20p, from 151.93p at the start of June to 131.75 a litre in the last week of July.

The last time it was at this price was in May, with average pump prices at 167p, not 183p a litre as now.

The RAC said the price cuts are “far too slow even after factoring in the two weeks it generally takes for the smallest retailers to use up their existing fuel and buy more supply at a new – in this case – lower price”.

‘Cost drivers dear and is still doing so’

The motoring firm said it “believes the biggest retailers’ failure to reduce petrol pump prices in line with the drop in the wholesale price of unleaded has cost drivers dear and is still doing so”.

Based on average wholesale prices last week, it estimates petrol should be around 167p a litre which means drivers filling up now at the July average of 182.69p are paying nearly £9 a tank more than they should be. And diesel should be closer to 182p – nearly £6 a tank lower than the end of July average.

RAC fuel spokesman, Simon Williams, said: “July has been an unnecessarily tough month for drivers due to the big four supermarkets’ unwillingness to cut their prices to a more a reasonable level, reflecting the consistent and significant reductions in the wholesale cost of petrol and diesel.

“As it was, we saw independent retailers leading the charge with fairer pump prices appearing all around the country which eventually forced the supermarkets to finally implement a more substantial cut late last Friday afternoon.

“What ought to have happened is that the biggest retailers cut their prices more significantly on a daily basis, given the wholesale price of petrol has fallen steadily over the last eight weeks. Instead, average retailer margin for petrol across the industry has been up around 20p a litre for the last two weeks – more than three times its long-term average.”

Williams added: “The best advice for filling up is no longer to assume the supermarkets are the cheapest, but to shop around as it’s highly likely you’ll find an independent retailer which is doing the right thing and fairly reflecting their lower wholesale costs by charging a lower price. This is really encouraging because the independents buy new stock less frequently than the supermarkets as they don’t sell as much, and consequently aren’t as well positioned as their rivals to be able to snap up fuel at lower prices when there are sudden market drops.”

Supermarket petrol prices

Here’s what the big four supermarkets have announced relating to pump price cuts:

Asda: Cut the price of unleaded by 5ppl and diesel by 3ppl, so drivers pay on average 174ppl for unleaded and 185ppl for diesel when filling up at Asda’s 323 forecourts. It follows an earlier price cut in the week of 4ppl, reducing fuel prices by 9ppl on unleaded and 7ppl on diesel since the start of last week.

Morrisons: It has cut fuel prices by an average of over 6p a litre in the past week.

Sainsbury’s: A spokesperson, said: “We are committed to offering motorists great value and over the weekend we lowered the price of petrol and diesel across our forecourts. We price locally and competitively.”

Tesco: Unleaded was cut by an average of 6.5p while diesel was cut by an average of 4.5p from 1 August.

Tesco chief product officer, Ashwin Prasad, said: “We know how tough rising fuel bills have been for households across the UK, and so we hope that these price cuts will go some way to help – particularly as more families head out on their summer holidays this week.”

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