Fuel prices rise for third month in a row but 5p cut could be on its way
Fuel prices rose again in August, marking the third consecutive monthly increase for both petrol and diesel.
However, the rise for both fuels was smaller than in the previous month and observers have predicted that they could begin to drop again if retailers follow trends in the wholesale market.
According to RAC Fuel Watch data, petrol rose half a penny per litre in August to 114.88p and diesel by a third of a penny to 118.47p. That is substantially less than the 3p per litre increase for both in July.
It means that while prices have increased at many forecourts around the UK both fuels are still 13p per litre cheaper than they were at the end of January.
The coronavirus pandemic’s impact on supply and demand saw sharp falls in the wholesale price of fuel earlier this year, with UK supermarkets slashing their forecourt costs to less than £1 a litre.
Last month supermarkets, which generally offer the lowest prices, increased their prices slightly, with petrol rising by a third of penny to 109.55p and diesel by over half a penny (0.63p) to 114.17p. However, they remain the cheapest fuel retailers in the country, at around 5p per litre cheapers for petrol and 4p per litre cheaper for diesel.
Motorway service stations - generally far more expensive than the average filling station - actually bucked the trend last month, with no increase in forecourt prices, partly linked to a price reduction trial by operator Moto. However, they remained 10p more expensive than the UK average.
RAC fuel spokesman Simon Williams said that the relatively small increase in August was a relief for drivers and predicted that petrol could fall back by around 1p per litre while diesel could drop by up to 5p per litre in coming weeks.
He said: “Even though pump prices have risen for three consecutive months, August’s increase was slight, sparing drivers any nasty shocks when they went to fill up. We had feared prices might rise more quickly as people started driving more after the lockdown but so far petrol has only gone up 9p a litre from its low of just under 106p in May which, it’s important to remember, is still 13p a litre less than it was in January.
“It was good news for drivers that August didn’t see the price of fuel jump, especially as so many people were ‘staycationing’. It was also positive that motorway fill-ups remained more reasonably priced than they have been in the past.
“The RAC is aware that Moto is experimenting with selling fuel that’s only a few pence a litre above supermarket prices. While it’s unlikely this trial – as yet – signals an industry-wide change of direction regarding fuel prices it won’t have gone unnoticed by its competitors so there’s a chance that service station prices may be lower than they would otherwise have been.
“The short-term outlook for pump prices generally does not appear ominous for UK drivers despite a blip in the oil price at the end of August.
“Our pump price forecast for the next fortnight shows petrol should come down by a penny while diesel ought to fall by around 5p a litre if retailers play fair and reflect the downward movement in the wholesale price properly.”