FUEL WATCH: Petrol prices bottom out in January, but now start slow rise again

After three consecutive months of falls, the average price of petrol bottomed out at 148.35p towards the end of January and has now started to slowly rise again, data from RAC Fuel Watch reveals.

Having at one point been as much as 3.5p lower than at the start of the month, unleaded closed January at 148.89p – 3p lower than it began (151.85p). The last time drivers filled up at this price was in mid-February 2022 before Russia invaded Ukraine.

The average price of diesel dropped by 4p from 174.37p to 170.37p – a price last seen in March 2022. This means a tank of diesel now costs £93.70 – £2.20 less than at the beginning of January. A petrol fill-up is now £81.89 – down £1.63 in the month.

Filling up at one of the big four supermarkets was around 3p a litre cheaper for both fuels, with the average price of petrol at their sites finishing January at 145.71p (down 2.25p) and diesel at 167.49p (down 2.79p). Asda had the lowest prices with a litre of unleaded costing 144.61p (down to 2.5p) and diesel 166.09p (down 3.6p).

RAC fuel spokesman Simon Williams said: “Although January saw fuel prices fall for the third month in a row, there is now more cause for concern than celebration as petrol has already begun to creep back up very slightly.

“Monthly reductions of 3p for petrol and 4p for diesel were welcome but sadly the first month of the year saw the wholesale price of petrol rise by 2p and diesel by 3p. Despite this, while unleaded has been overpriced for months due to the biggest retailers refusing to lower their prices in line with the lower wholesale price, diesel is still too expensive even after factoring in the slight wholesale uptick.

“As always drivers’ fate at the pumps very much depends on what happens with the price of oil. But with the barrel now trading consistently well above $80 and analysts predicting a rise to $90 due increased demand from a re-opened China following the end of its zero-Covid policy, there is a very real risk that we could see petrol prices go back up to an average of 155p all too quickly. Eyes will also be on the Chancellor next month when he delivers his Spring Budget, so we hope he refrains from pouring fuel on the inflationary fire by hiking duty.

“For the time being, however, the big four supermarkets – which dominate UK fuel retailing – are yet to raise their prices in response to the slight rise in wholesale costs which is encouraging for drivers around the country. We urge them to continue to stand firm and only increase pump prices if the wholesale price really forces their hand.

“The three months of significantly lower wholesale prices starting from mid-October have highlighted some interesting regional and local pricing disparities, often due to smaller retailers passing on savings in the wholesale cost of fuel to their customers while their supermarket rivals have been reluctant to do the same. So, in areas where there is little competition from lower-cost retailers, drivers have sadly often seen far higher pump prices.

“Looking around the UK at the end of January we can see forecourt prices were generally cheaper in the North West, North East, Wales and Scotland, while Northern Ireland – for a number of reasons – remains an anomaly being 4p cheaper than the UK average.”