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Average price of fuel drops for first time in four months

Date: 03 August 2016   |   Author: Daniel Puddicombe

The price of fuel has fallen for the first time in four months, data from the RAC has shown.

Reductions in price, however, are small - 0.4p a litre from 112.2p to 111.7p for petrol and 0.06p from 112.47p to 111.41p for diesel.

According to the RAC, the fall in pump prices is down to a reduction in the wholesale cost of petrol and diesel, with the price retailers paying falling by 4.41p for diesel and 4.67p for petrol in July, thanks to an 11% drop in the price of a barrel of oil.

As a result of these savings, many supermarkets this week have cut the price of fuel by 2p/litre. According to the RAC, supermarkets are responsible for selling around 40% of the UK's fuel.

"July's slight reduction in fuel prices is very welcome as it has ended four months of rising prices on the forecourt," said Simon Williams, RAC fuel spokesman. "We are hopeful that the early August supermarket cut will make a bigger difference to household budgets in the summer holiday period even though it came a more than a week later than it should have done."

"The falling price of fuel on the wholesale market is being driven by fears of slowing global economic growth adding to an existing oversupply of both crude oil and refined products such as petrol and diesel," he added. "Interestingly, this has happened at time when there are oil supply disruptions in Nigeria and Libya which had they not occurred would have meant there was even more oil on the world market.