Fuel prices in the UK have dropped to a nine-month low, with petrol averaging £1.50 per litre and diesel expected to fall below £1.70 per litre, according to data from RAC FuelWatch.
This news may bring a smudge of relief to drivers who have been struggling with the ongoing cost-of-living crisis and the traditional post-Christmas squeeze on finances but, in reality, should we be happy that prices have dropped to levels that are still typically much higher than any of the UK’s economic peers.
This ‘good news’ should also come with a pinch of salt as the Office for Budget Responsibility (OBR) has predicted a 23% increase in fuel duty in March 2023, which would add £5.7bn to tax receipts and raise fuel prices by around 12p per litre.
This would be the first fuel duty increase since 2011 but would of course come up against a firm wall of criticism, so whether it will be passed is very much TBC.
There is also still long standing criticism of some fuel retailers who have been slow to pass on the lower prices of crude oil to consumers with the AA has asking the Competition and Markets Authority to investigate how these independent retailers are able to charge lower prices without the economies of scale of bigger retailers.
In conclusion, while the current drop in fuel prices may provide some relief for drivers, the predicted increase in fuel duty in the future is a cause for concern for household budgets that are already stretched.
Luke Bosdet, the AA fuel price spokesperson, told The Guardian: ‘One of the features that has become very obvious since the summer has been maverick independent fuel retailers, who have often slashed their pump prices way below nearby supermarkets and bigger oil company-supplied sites.
‘How they, without the economies of scale of the bigger retailers, have been able to charge much lower prices but say that they can operate at such low levels is something that the CMA will have to consider.’
Should we be celebrating the return to £1.50? Let us know in the comments below.