The average price of petrol in the UK has increased for the second consecutive month, according to data from RAC Fuel Watch. While diesel prices remained stable, the rise in petrol prices has raised concerns among motorists.
As of July, the cost of a litre of unleaded petrol across the country now stands at 145p, reflecting a one-penny increase since the beginning of the month and nearly a 2p increase from the start of June. This spike in prices can be attributed to the wholesale price of petrol, which rose by 6p per litre from 19 July due to the increasing cost of oil. Retailers wasted no time passing on this added expense to drivers, resulting in an average price increase of nearly 2p in that timeframe.
Meanwhile, diesel prices remained steady at 146p (145.84p), marking the end of an eight-month streak of falling prices. This means that refuelling a 55-litre family car now costs approximately £80, regardless of the fuel type - £80.21 for diesel and £79.75 for petrol.
The price of oil experienced a $10 per barrel increase in July, reaching $85.56 by the end of the month. This is the highest price seen since mid-April. As a consequence, the wholesale price of both petrol and diesel has risen - 7p for unleaded petrol and nearly 9.5p for diesel.
The RAC's analysis of this data suggests that retailers' profit margins are now under pressure. It remains to be seen how quickly prices will continue to rise and whether supermarkets, which play a dominant role in UK fuel retailing, will operate with smaller margins closer to their long-term averages. Alternatively, there is speculation as to whether they will seek to profit more per litre than they have historically.
RAC fuel spokesman, Simon Williams, said: “July marks a turning point in the year for fuel prices as diesel stopped falling while petrol recorded its second consecutive monthly increase. But more concerning is the fact that oil has gone back up to $85 a barrel, causing wholesale prices to rise significantly. While we’re fortunately not in the kind of upward price spiral we experienced last year, it feels like the better times at the pump are over for the time being. If oil producers continue to curb production then bigger forecourt price rises could be on the cards.
“This has led to a squeeze on retailer margins which were too large, so we’re currently seeing a return to them making an amount per litre more similar to their longer-term averages. The big question now is how quickly and how far pump prices rise. We sincerely hope we won’t see them shoot up like the proverbial rocket as this would indicate the Competition and Markets Authority’s fuel market investigation findings and recommendations have not had an immediate impact. Encouragingly, there has so far been very little upward movement from the big four supermarkets but only time will tell.
“But interestingly, petrol and diesel are still considerably cheaper in Northern Ireland despite them going up by 1p and 3p respectively. Unleaded is 4p less than the UK average (£2.20 a tank) and diesel almost 5p (£2.75 a tank). Sadly, this shows drivers on this side of the Irish Sea are still losing out. If and when we finally see the two sets of prices coming together we hope it will be as a result of lower forecourt prices in the rest of the UK.”