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Prices at the pump are not falling in line with wholesale fuel costs, according to the Competition and Markets Authority, raising concerns that weak forecourt competition is exacerbating the cost of living crisis.
In September and October, wholesale costs fell “while retail prices did not”, the competition watchdog said on Thursday, noting that prices increased by 11 pence per litre for petrol and 13.9 ppl for diesel since May 2023.
The difference between the average price drivers paid at the pump and the price retailers buy fuel was 17-18 ppl at the end of October, “significantly higher” than the long-term average of 5-10 ppl, the CMA added.
For the period from June to August, increasing prices were probably driven by “global factors” such as increased crude oil prices, the CMA said.
“Drivers are feeling the pain again as petrol prices at the pump have been on the rise since June,” said Sarah Cardell, chief executive of the CMA.
“More recent trends give cause for concern that competition is still not working well in this market to hold down pump prices,” she added.
The data is the first monitoring report of the market by the CMA as part of an initiative introduced this summer to boost competition.
It comes after the body found in July that Asda and Morrisons had raised their margins on fuel since being taken over by private equity groups in 2020 and 2021 respectively.
This led to raised prices across the market, due to the two supermarkets’ size and traditional roles as cost-cutters, according to the CMA.
Average fuel margins of supermarkets fell from 11.9 ppl in May to 7.3 ppl in August, according to the data released on Thursday, but this was still higher than the annual average before 2021.
Data on margins, which is provided voluntarily by retailers, was not yet available for September to October, the CMA said.
“Old habits die hard in the road fuel trade. Failure to pass on the full savings from lower wholesale costs to hard-pressed motorists, their families and businesses is unacceptable in a cost of living crisis,” said Luke Bosdet of the AA, the roadside recovery group.
Gordon Balmer, executive director of the Petrol Retailers Association, which represents independent fuel retailers, said his members face pressures that mean margins “have to be higher”.
“We’ve had increases in energy costs, increases in wages and increased theft of fuel so all these costs have to be paid for,” he said.
The CMA has recommended the establishment of a statutory monitoring body and an online fuel-finder scheme to give drivers access to live, station-by-station fuel prices. The government had said it would consult on the proposals this autumn but consultations have not yet begun.
The RAC said the findings showed that the recommended “price monitoring body” was “desperately needed”, but that it should have “the power to take action against major retailers that don’t lower prices quickly enough in a falling wholesale market”.
Source: Economy - ft.com
