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Pump price savings still fall short despite Sunak’s fuel duty cut

·Finance Reporter, Yahoo Finance UK
·2-min read
Prices at the pump are not reflecting the full extent of the fuel duty cut. Photo: PA
Prices at the pump are not reflecting the full extent of the fuel duty cut. Photo: PA

Drivers are yet to see the pump price drop when filling their tanks following chancellor Rishi Sunak’s decision to cut the fuel duty.

Sunak used his spring statement on 23 March to reduce fuel duty by 5p per litre. That was worth a saving of 6p per litre owing to the impact on VAT.

Read more: IFS calls Sunak 'fiscal illusionist' after warning measures are not enough

But the average price of a litre of petrol at UK forecourts has fallen by just 3.7p per litre.

Figures from data firm Experian Catalist show the average price per litre on Sunday was 163.6p, compared with 167.3p on 22 March.

Diesel drivers have seen a saving of just 2.5p at the pump, according to the AA, with prices dropping from 179.7p to 177.3p.

Luke Bosdet from the AA said: “Why are drivers not surprised that on average a third of the petrol saving has yet to be passed on at the pumps?

"The fuel trade always disputes the accusation that pump prices shoot up like a rocket and fall like a feather. Now we know the truth."

Watch: Key takeaways from Rishi Sunak's Spring Statement

Even with Friday’s wholesale cost of petrol, at 72.17p a litre, heading back towards the heights of a fortnight ago, which stood at an average 72.71p between 7 and 11 March, the Treasury must have expected more from UK forecourts in general.

Diesel has some excuse, with wholesale costs that had averaged 86.40p in the second week of March reaching 90.3p on Friday, although that should be taking a few days to filter through to the pumps.

Petrol and diesel prices had hit highs of 167.3p and 179.72p a litre respectively, before Sunak’s announcement.

Read more: Spring Statement: Rishi Sunak cuts income tax and fuel duty

RAC spokesman Rod Dennis said: “Drivers will be disappointed that prices haven’t come down further since last week’s fuel duty cut.

“As duty is charged on the wholesale cost of fuel, it’s the case that some retailers will be waiting for new deliveries in order to buy fuel in at the cheaper rate — meaning drivers will have to wait to see the benefit at the pumps.

“What happens to the oil price, and in turn wholesale costs, in the coming days will be crucial. If prices rise, there’s a risk the fuel duty cut will be cancelled out as retailers face higher costs.”

The chancellor’s spring statement has received widespread criticism for failing to support poorer families and other vulnerable groups from soaring inflation.