Fuel prices across the UK have hit further new highs, raising concerns that retailers are not fully passing on the historic duty cut in the Spring Statement.    

Retailers are taking on average 2p a litre more in profit than they were before the Chancellor’s 5p duty cut

Petrol’s average pump price across the UK hit 167.64p a litre yesterday, beating the previous record of 167.30p set on 22 March, the day before the Chancellor’s 5p fuel duty cut and the resultant 1p VAT reduction.   

Diesel also continues to climb to new all-time highs, reaching 180.88p a litre, beating the records already set at the start of the week.   

Compared to a year ago, when petrol averaged 128.38p a litre and diesel 130.80p, the cost of filling the typical 55-litre has risen from £70.61 to £92.20 for petrol and from £71.94 to £99.48 for diesel.  

“Despite his best efforts, the Chancellor must feel like King Canute having tried to reverse the tide of rising pump prices. At least though, he can say that UK drivers would be £2.75 a tank even more worse off now had he not tried to take action in March,” said Luke Bosdet, the AA’s fuel price spokesman.  

“He hasn’t been helped by a fuel trade that, despite a 16p-a-litre fall in petrol costs that coincided with the Spring Statement, couldn’t even pass on the full 5p fuel duty cut and the 1p VAT reduction that it brought with it.”  

Analysis of fuel margins released by the RAC this week shows retailers are taking on average 2p a litre more than they were before the Chancellor’s 5p duty cut. The average margin for petrol is currently 11p a litre and for diesel 8p. But in the month leading up to the duty cut it was 9p for petrol and 6p for diesel – and the long-term average margin is 7.5p and 8p respectively. 

It’s led to renewed calls for retailers to reduce their margins – and according to reports, the Government has told the industry that the competition regulator is monitoring the situation.  

Business Secretary Kwasi Kwarteng said in a letter the public was “rightly expressing concern about the pace of the increase in prices at the forecourt” – and warned that officials had recently engaged the Competition and Markets Authority about the issue, as a result of “perceived intransigence to date”. 

But Gordon Balmer, executive director of the Petrol Retailers Association that represents independent forecourts, said comparing pump prices against wholesale prices “only gives a partial picture” and added that margins were “often not enough to cover operating costs”.  

The RAC also continues to highlight how cutting VAT to 15%, as it had urged the Chancellor to do, rather than cutting duty would mean drivers of diesel vehicles would be around 2p a litre better off, or £1 for every full tank.    

Spokesman Simon Williams said: “Drivers continue to pay 28 to 30p in VAT on every litre they buy, and these amounts will only increase the higher petrol and diesel prices go. Arguably, VAT on fuel is proving to be the Treasury’s own windfall.”