Last week, the average UK price of unleaded petrol reached just over £1.45 for the first time since 6th December 2023. This is a 3.4% increase from a month ago. The year-to-date low point was in the middle of January when prices dipped below the £1.39 mark but have been increasing weekly since. The end of February saw drivers pay 4ppl more at the pump than at the start of the month.

Diesel drivers are also paying more than at the start of the year, with the average diesel price reaching over £154.5. Diesel price rose 4.5ppl during February.

Wholesale Brent Crude Oil, the main product component of unleaded and diesel, has been driving the increase in pricing at the pump. However, prices have started to hold steadily around $83 a barrel. Investors are balancing OPEC+ supply cuts with uncertainty surrounding interest rate changes and lingering demand concerns.

The impact of this is that pump prices may start to become steadier in the short term as wholesale prices slow their rate of increase.

Tesco has become the cheapest supermarket brand in week 10 of this year, taking the crown usually reserved for Asda or Morrisons. If Tesco holds firm on prices and gains market share, this could help bring Asda and Morrisons’ prices down. This, in turn, may help reduce the market across the board. However, if Tesco increases prices, we may see prices hold or increase slightly elsewhere. Asda dropped unleaded prices slightly from week 9 into week 10. How this evolves will play a big part in the UK pricing as a whole in the next week or two.

Tesco also has the tightest pricing spread of all brands. This means that your pricing will be similar no matter where you are in the country. In contrast, bp has the widest spread. In general, brand-specific pricing spreads have narrowed through 2024. This is an indication that pricing is more consistent regardless of location.

That being said, Chester and Cumbria drivers are the worst hit when it comes to pricing, having to pay more than 5ppl above the UK average. These regions, along with Dumfries, also have the broadest range of pricing. Making it essential to shop around for prices to ensure you are paying a fair price.

If Tesco holds firm on its pricing and with the market easing up, we may have slightly better news on pricing in March than in February. Large pricing decreases feel unlikely, but small regional reductions and a market that can hold steady for a week or two should be possible.

Today the Chancellor of the Exchequer delivered his Spring Budget at which he announced that the government is extending the temporary 5p cut in fuel duty rates for a further 12 months (until March 2025).  The planned inflation increase in fuel duty for 2024-25 has also been cancelled and, taken together, this will maintain fuel duty rates at current levels for another year and represents a reduction of around 7p per litre for main petrol and diesel rates in comparison to previous plans. 

UK Fuel Prices 5p cut in fuel duty rates for a further 12 months

What are your thoughts on the fuel duty freeze? Let us know in the comments. 

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