Yahoo Finance UK supermarkets accused of ramping up margins on fuel while inflation takes toll on consumers
UK supermarkets appear to have doubled their margins on petrol and diesel costs since the start of the Ukraine war despite lower wholesale fuel prices, according to data and analysis from car insurer RAC.
Its research found that prior to the start of the war in Ukraine the big four supermarkets (Asda, Tesco, Sainsbury's and Morrison), which dominate UK fuel retailing, were making a margin of just under 5p (4.7p) a litre on fuel – 3.7p for petrol and 5.7p for diesel. Since then, this has increased to 10p (9.3p for petrol and 10.8p for diesel).
RAC Fuel Watch data for 2022 shows that the margin on supermarket petrol climbed to almost 11p (10.8p) a litre, at one point hitting 20p in the weeks after a new pump price high of 191.5p was recorded on 3 July on the back of the soaring cost of oil.
The data comes amid news that, although inflation came in at a lower clip than expected for June, it still stands at 7.9%. Economists predicted that the rate would dip to 8.2% from 8.7% in both April and May. This is still way above the Bank of England's target of 2%.
Read more: Higher retail sales gives Bank of England fuel for interest rate rises
A spokesperson from the RAC linked the larger than expected drop in inflation to dropping fuel costs, but said that although supermarkets appeared to have disproportionately benefitted from fluctuating oil markets, they had not fully passed this on to consumers.
"[Inflation] could have been lower still had the supermarkets reduced their pump prices in line with cheaper wholesale costs," said RAC fuel spokesman Simon Williams.
In response to RAC data, Asda said it would be making prices visible for all fuel stations in the coming weeks.
"Asda’s profits last year were down by more than 20% year-on-year, resulting in a profit of 1.7p for every pound earned," said a company spokesperson.
"This decrease is a direct result of absorbing inflation to keep grocery prices as low as possible, while investing in new initiatives to help families during the cost-of-living crisis.”
Sainsbury's and Tesco did not respond to requests for comment before press time. Morrison declined to comment.
Asda in particular has come under fire in recent weeks in connection with scrutiny around fuel price hikes. An investigation by the Competition and Markets Authority (CMA) at the start of July found that increased supermarket profit margins led to drivers paying an extra 6p per litre for fuel last year. Asda was fined £60,000 by the regulator for failing to provide information when required.
The CMA concluded that there should be a new, legally mandated system, requiring fuel providers to publish live data on fuel charges. This would enable consumers to see petrol station costs in real time on their phones or sat-navs. The regulator also proposed a fuel monitoring body.
Watch: Asda co-owner mauled by MPs over fuel prices and 'fire and rehire' tactics
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