Supermarkets have cut more than 7p a litre from the price of diesel since the UK’s competition watchdog warned it would question retail bosses about unnecessarily high forecourt prices, according to the RAC.
The motoring group found that the average price of diesel fell by 7.44p a litre, from 151.02p two weeks ago to 143.58p this week, after the Competition and Markets Authority (CMA) raised concerns that retailers were making “sustained higher margins” from sales of diesel.
The RAC said supermarkets had quickened the pace of their diesel price cuts, which have lagged behind the fall in energy markets in recent months, after the CMA promised last month to “get to the bottom” of higher than expected diesel pump prices.
However, the motoring group said big retailers, including supermarkets, could cut average diesel prices by a further 6p a litre, to 137p, and still have a profit margin higher than the long-term average, which stands at 7p a litre.
The CMA set out plans last month to question senior retail executives about the profits they make at the pumps, and raised concerns about “the sustained higher margins on diesel compared [with] petrol we have seen this year”.
Higher than necessary diesel prices are an important issue for businesses and motoring campaigners because they are most likely to affect hauliers and commercial van owners, which may then pass on those costs to their customers.
The CMA set out its plans to help relieve the cost of living crisis last month by addressing the rising prices of road fuels and groceries. It said that while “global factors”, including Russia’s invasion of Ukraine, had contributed to an increase in fuel prices, it was concerned that retailers were making greater profit margins at the pumps than before the Covid pandemic.
The average supermarket pump prices last year were about 5p a litre more expensive than they would have been had supermarkets maintained their average profit margins at 2019 levels, the CMA said.
Drivers were forced to pay 9p a litre more for diesel than petrol last month even though the wholesale market price for diesel has remained below the market price for petrol since March. By the start of the week the difference had shrunk to just 2.5p, according to the RAC’s data.
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Simon Williams, a spokesperson for the RAC, said: “Significant cuts to the price of supermarket diesel were long overdue as its wholesale price has been below petrol’s since the end of March.
“For two straight months it has cost retailers less to buy diesel on the wholesale market than it has petrol, yet they continue to charge more for diesel at the pumps.”