The competition regulator has announced it will carry out a “short and focused review” of fuel prices.
Andrea Coscelli, chief executive of the Competition and Markets Authority (CMA), said record pump prices are “causing significant concern” for millions of people.
The review was requested by Business Secretary Kwasi Kwarteng on Saturday.
He expressed concern that the 5p per litre cut in fuel duty implemented in March has not stopped prices from soaring.
“The British people are rightly frustrated that the £5 billion package does not always appear to have been passed through to forecourt prices,” he wrote.
Figures from data firm Experian show the average price of a litre of petrol at UK forecourts climbed to a record 185.0p on Sunday.
That was an increase of 7.1p in just a week.
The average price of diesel was 190.9p per litre on Sunday.
— Competition & Markets Authority (@CMAgovUK) June 12, 2022
Mr Coscelli’s response to Mr Kwarteng said: “High road fuel prices are causing significant concern for the millions of consumers and businesses who rely on being able to afford to fill up their vehicles.
“As you note, global factors, including the war in Ukraine, have been the principal driver of recent trends.
“But if competition is not working well in the retail fuel market, pump prices will be even higher than they need to be.
“With that in mind, the CMA will, as you request, carry out a short and focused review of the market, and provide advice to Government on steps that might be taken to improve outcomes for consumers across the UK.”
He added that the CMA will consider “what further work may be necessary” once the review is completed.
RAC fuel spokesman Simon Williams described the CMA’s actions as “a positive step” but noted that retailers “are constantly having to put up their prices to reflect the fact their costs are increasing every time they buy new stock”.
He said: “Since Russia invaded Ukraine on February 24, the wholesale price of petrol has gone up by 28%.
“This is why the Government’s 5p March duty cut has had little effect, whether or not it’s been fully passed on by retailers, and why they need to go further now to help drivers.”
But the Prime Minister’s official spokesman said there are “no plans” for a further duty cut.
Figures from price comparison website PetrolPrices show filling stations at motorway service areas are charging up to 202.9p per litre for petrol.
The most expensive non-motorway site – excluding a handful of rural locations in the Scottish Highlands and a small petrol station in Chelsea, west London – is in Shrewsbury, Shropshire, which is charging 197.9p per litre.
AA fuel price spokesman Luke Bosdet said the rise in petrol prices “should be grinding to a halt” by the end of the week due to wholesale prices falling since the start of the month.
He went on: “If they continue to go up substantially afterwards, we will be intrigued to hear what excuses the fuel trade has this time.”
Mr Bosdet added that the “relentless surge” in wholesale and retail costs for diesel is “a nightmare” which will have a knock-on effect on delivery prices for goods and services.