UK Petrol and Diesel Prices Drop Fastest This Year – Save £4 Per Fill-Up
Families are saving about £4 when filling up their cars compared to last month, with even bigger savings expected soon.
The cost of petrol and diesel in the UK is falling quickly, with families paying around £4 less to fill up a typical car than just a month ago. The RAC reported that the average price of a liter of unleaded petrol is now just over 136p, down from 143p last month. Diesel is about 141p per liter, compared to almost 148p a month ago.
This is the biggest drop in fuel prices since December last year when prices also fell by 7p per liter. According to the RAC, more price drops are expected, and petrol could fall to 132p a liter, while diesel might drop to 138p in the next two weeks. If this happens, the fuel prices will be the lowest in three years.
Why Are Fuel Prices Falling?
The main reason for the drop is lower global demand for oil, which has brought the price of a barrel down to $73. Another reason is the stronger British pound, making oil cheaper since it’s traded in dollars.
This is a big change from April when petrol prices hit 150p per liter, and diesel reached 158p. Earlier this week, the Office for National Statistics said the drop in fuel prices helped keep inflation steady at 2.2% in August.
RAC’s Take on the Price Drops
The RAC’s fuel spokesperson, Simon Williams, said it’s great to see fuel prices falling so fast, as it’s good for drivers’ wallets and helps keep inflation low. He warned that global oil prices and the pound’s strength can change quickly, beyond drivers’ control. With fuel being a big part of household spending, he advised people to get the most out of every pound they spend on fuel.
Possible Fuel Duty Increase
The RAC also warned that a rise in fuel duty could be coming next month as part of Rachel Reeves’s budget speech. Labor is trying to address a £22bn gap in public finances.
In March 2022, then-chancellor Rishi Sunak cut fuel duty by 5p per liter after Russia’s invasion of Ukraine drove up energy costs. However, the current chancellor may end this cut, reducing fuel duty to 58p per liter.
At the time of the cut, the RAC pointed out that the discount cost the Treasury £2bn a year and might be removed. Simon Williams mentioned that although the RAC would normally oppose an increase in fuel duty, drivers haven’t benefited much from the discount due to high retailer margins. He added that the government must find new ways to tax drivers as more electric cars hit the roads. A “pay-per-mile” system could be the future, where VAT would only tax fuel.
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