The falling pound and stock market speculators are driving up the cost of petrol, according to the AA. The price of petrol at the pumps has gone up a further 1p in the last five days.
The AA says that in little more than a month the cost of filling up an average saloon has gone up by more than £4 and it has been predicted that by Easter we could be seeing the most expensive petrol ever.
ITV News Correspondent Emily Morgan reports:
Millions of people who are already feeling the squeeze will be worried about how they can afford this latest rise in the price of petrol.
George Osborne must use next month’s Budget to cancel his tax cut for millionaires this April and instead help people on middle and low incomes struggling with the rising cost of fuel and food.
A temporary VAT cut would help to kick-start the economy and take 3p off the price of a litre of fuel right now. And a new lower 10p starting rate of tax, paid for by a mansion tax, would help 25 million people on middle and low incomes.
The Chancellor must finally act in the Budget to support families feeling the squeeze and boost growth and jobs in our flatlining economy.
There are a lot of things pushing up the prices of petrol. Paradoxically it might be one of the things the Bank of England is doing to try and stimulate the economy, which is partly to blame.
We know that it is mulling more quantitative easing (QE) and one of the side effects of QE is to weaken the pound against other currencies.
The pound has lost about a tenth of its value against the US dollar since last spring.
Oil is priced in US dollars, so that means it is more expensive for us Brits to buy it. At the same time the actual price of oil has risen sharply in the first six weeks of this year, that is partly to do with Middle East unrest and problems in Iran.
That has been building up into wholesale prices which are yet to feed through to the forecourts, which means more pressure yet to come for the companies that use fuel, like haulage companies and also hard-pressed motorists.
Chancellor George Osborne has said that petrol remains 10 pence cheaper than it might have been under Labour despite the price of petrol at the pumps has going up a further 1p in the last five days.
"I completely understand the pressure on families, that's why we've taken action to make sure that petrol is 10p per litre cheaper than it would have been if we'd stuck with the tax rises of the last Labour government."
This is the third 10p-a-litre wholesale price surge in 11 months, given extra vigour by currency speculators betting against the pound.
Given the lashing motoring families and UK businesses are taking from speculator-driven fuel prices, we hope the Chancellor spells out clearly in the forthcoming Budget that he can feel the pressure rocketing fuel price inflation places on families and business, and that he will cancel the September rise if that strain is too great.
The AA says drivers have been caught between a pound weakened against the dollar and soaring wholesale prices, both due to stock market speculation.
- Yorkshire and Humberside and the north of England are the cheapest for petrol at the moment at 137.6p a litre
- Prices in London and Scotland at an average of 137.8p
- Northern Ireland and south-east England are the most expensive at 145.2p
- Drivers used 1.465 billion litres of petrol last month, down 14 million on the previous all-time low set in March last year and nearly 100 million below December's consumption of 1.564 billion
The falling pound and stock market speculators are driving up the cost of petrol. The AA says after surging 5p a litre over a month, the price of petrol at the pumps has gone up a further 1p in the last five days.
The AA says the average cost of petrol is now 138.32p a litre. Diesel has risen 4.78p from its mid-January price to stand at an average of 145.10p. The latest figures show that petrol has risen 6.24p a litre since early January, adding £3.12 to the cost of refilling a typical 50-litre tank.
Petrol prices are expected to rise by 4 pence a litre in the next few days as retailers pass on increased wholesale costs to motorists, the Telegraph reports.
The rise has been forecast by the Petrol Retailers Association (PRA), who said wholesale prices had risen by five pence a litre since Christmas. Brian Madderson, chairman of the PRA, said:
"Independent retailers have been soaking up this increase at the expense of already tight margins because they know how hard the motorist is squeezed. But the floodgates will have to open soon."
The AA, which has forecast a smaller rise of 2.5 pence a litre, accused the industry of failing to pass on recent falls in wholesale prices to motorists as quickly as increases. Edmund King, president of the AA, said:
"Wholesale petrol prices turned upward in the first week of January, average pump prices six days later. If falls in wholesale were reflected as quickly, no one would mind, but they’re not."
The Petrol Retailers Association is warning that petrol prices could go up in the next few days.
After three months of falling prices at the pumps, wholesale prices have risen by five pence a litre since Christmas.
ITV Daybreak's Katy Fawcett reports.
Petrol prices have fallen but drivers are still being short-changed, according to the AA.Read the full story ›