Uk petrol prices: Liter of fuel at UK forecourts hits record 167.7p amid cost-of-living crisis

Fuel prices in Britain are continuing to climb to record highs, with the average price of a liter of petrol at UK forecourts hitting 167.7p yesterday – up from 165.1pa week earlier and 147.8p three months ago.

The average price of diesel yesterday was 181.1p per liter, up from 179.7p last week and 152.0p in late February before Russia’s invasion of Ukraine, according to the Department for Business, Energy and Industrial Strategy.

Chancellor Rishi Sunak implemented a 5p per liter cut in fuel duty on March 23, two days after average prices were 166.8p for petrol and 180.3p for diesel – but retailers have since been accused of raising profit margins.

It comes as calls to reduce fuel duty and VAT by 40 per cent were raised in Parliament yesterday after more than 102,000 signatures were collected for a petition outlining the two-year proposal to combat soaring costs for fuel.

The average price of diesel and unleaded petrol in UK forecourts is shown in this graph with data going back six years

The average price of diesel and unleaded petrol in UK forecourts is shown in this graph with data going back six years

The same data for the past year is shown in the graph above which shows how the prices have shot up since late February

The same data for the past year is shown in the graph above which shows how the prices have shot up since late February

The Department for Business, Energy and Industrial Strategy released this graphic to illustrate their data update today

The Department for Business, Energy and Industrial Strategy released this graphic to illustrate their data update today

Steve Gooding, director of the RAC Foundation, said: ‘This news (of higher fuel prices) means more financial frustration for drivers and businesses, not least the owners of the country’s 18 million petrol-powered cars, most of whom will be private individuals and families.

‘Unfortunately, the signs are that the pain isn’t over yet. Wholesale petrol prices are still close to recent highs and currently exceed those of diesel.

October energy price cap expected to hit £ 2,800

Ofgem boss Jonathan Brearley

Ofgem boss Jonathan Brearley

Ofgem chief executive Jonathan Brearley has told MPs today that the regulator is expecting an energy price cap in October ‘in the region of £ 2,800’.

Mr Brearley told the Business, Energy and Industrial Strategy Committee: ‘I am afraid to say conditions have worsened in the global gas market since Russia’s invasion of Ukraine. Gas prices are higher and highly volatile. At times, they have now reached over 10 times their normal level.

‘I know this is a very distressing time for customers but I do need to be clear with this committee, with customers and with the Government about the likely price implications for October. Therefore, later today I will be writing to the Chancellor to give him our latest estimates of the price cap uplift.

‘This is uncertain; we are only part way through the price cap window, but we are expecting a price cap in October in the region of £ 2,800. ‘

Ofgem’s prediction is a huge leap on April’s price cap increase of 54 per cent, or an increase of £ 693 a year to £ 1,971 for those on default tariffs paying by direct debit for the average household.

The Resolution Foundation said almost 10 million households could find themselves in ‘fuel stress’ this winter if Ofgem’s prediction came into effect.

The economic think tank’s analysis suggested that the number of families living in fuel stress – defined as spending at least a tenth of their total budgets on energy bills alone – would rise from five million to 9.6 million.

‘As many people are looking anxiously at the prospect of ever higher bills to heat and light their homes, so too an increasing number of families are facing transport poverty. For most drivers, in the short term, there is little option but to grit their teeth and pay up.

Even if they could afford them, the waiting time for new cars, including electric ones, can stretch to many months, and the used market is buoyant, meaning the scope to upgrade the family run-around for something more economical may be extremely limited. ‘

MPs debated the petition on reducing fuel duty and VAT yesterday in Westminster Hall and, while not specifically endorsing the proposal, called for the Government to go further to help.

SNP MP Patricia Gibson (North Ayrshire and Arran) said the UK Government’s 5p per liter fuel duty cut was ‘swallowed up’ by soaring prices and she suggested halving VAT from 20 per cent to 10 per cent.

She warned motorists currently pay more than 80p in tax on every liter they buy, noting: ‘A cut in VAT would be much more effective since VAT is charged on the total cost of the petrol or diesel.

‘So even if the price rises, the amount of VAT would be reduced so this is a much more impactful measure in trying to help motorists and consumers with spiralling costs.

‘The situation with inflation is now so serious that a very serious measure to ease inflationary pressures must be implemented, and I’d contend that halving VAT on fuel until the cost-of-living crisis is under better control is now essential and overdue. ‘

Separate statistics from data firm Experian Catalist last week showed the average cost of a liter of petrol at UK forecourts was 168.2p while diesel prices reached an average of 181.0p per liter.

MPs heard about the case of an NHS worker who has two disabled children, who said: ‘It’s a nightmare as I cannot afford to keep putting fuel in but I need it as they go to a special school a few miles away, and I have to go to different hospitals for work.

‘I go without food so my kids have food and fuel, all because these prices keep rising.’

The petition had said: ‘The Government should reduce the cost of fuel through a reduction of 40 per cent in fuel duty and VAT for two years. This can effectively offset the rise in fuel prices since 2020. ‘

Treasury minister Helen Whately said the Government has taken action and pointed to the temporary fuel duty cut.

She added: ‘Given that VAT is applied on top of fuel duty, the 5p duty cut on petrol and diesel does actually also result in a VAT reduction so it effectively translates to a reduction of 6p per liter overall.

Fuel prices are displayed at a Shell petrol station on Hadfield Road in Cardiff earlier this month

Fuel prices are displayed at a Shell petrol station on Hadfield Road in Cardiff earlier this month

‘That said, a VAT reduction generally isn’t the best way to provide help with fuel costs particularly as it wouldn’t help many businesses, many of which already claim back VAT paid on fuel used for business use.

Chancellor Rishi Sunak (pictured at a Cabinet meeting today) implemented a 5p per liter cut in fuel duty on March 23

Chancellor Rishi Sunak (pictured at a Cabinet meeting today) implemented a 5p per liter cut in fuel duty on March 23

‘Around 40 per cent of fuel is used by businesses so if we had just focused on reducing VAT instead of fuel duty that would have left businesses more exposed to the fuel price increases, in turn impacting on the cost of goods to consumers.’

Ms Whately said Mr Sunak ‘stands ready to do more’.

Meanwhile, a poll published yesterday by YouGov found that three in ten households are cutting back on food and other household essentials as the cost-of-living crisis continues.

The figures make clear that millions are already suffering even before the worst of the biggest squeeze on living standards since the 1950s takes effect.

The energy price cap rose by around £ 700 a year to just under £ 2,000 a year for a typical household from April 1 and there are fears of another increase to £ 2,800 in October.

At the same time, grocery industry leaders suggest food price inflation could rise from around 6 per cent to 10 per cent by the end of this year.

The high cost of petrol and diesel means many have also been reduced to rationing their use of the car, while other savings are being made by cutting back or canceling streaming services, such as Netflix.

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