UK supermarkets plan to pass chancellor Rishi Sunak's fuel duty reduction on to consumers as fuel prices soar in Britain amid geopolitical tensions.
The chancellor announced a cut to fuel duty to combat soaring prices at petrol pumps after Russia’s invasion of Ukraine sent costs even higher.
He revealed a temporary 5p per litre reduction until March 2023, the biggest rate cut on record. The move comes into effect at 6pm on Wednesday.
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Asda has said it will slash fuel prices by 6p per litre from 6pm on Wednesday following the 5p cut announced by Sunak in the Spring Statement.
It said in a statement that it will pass the 5p drop in fuel duty "straight on to its customers". It added that it "will reduce the price at the pumps by 6p per litre which includes a 1p reduction in VAT".
The supermarket added: "This means that motorists will see unleaded move back below 160ppl and diesel to 170ppl."
Sainsbury’s (SBRY.L) also said it "will be passing on the price reduction to customers", cutting the price of a litre by 6p which also includes a 1p reduction in VAT.
The grocery store added that the price reduction would come into effect at all Sainsbury’s forecourts on Wednesday evening.
CEO Simon Roberts said: "Sainsbury’s will continue to sell through stock it purchased while the higher fuel duty was in effect but is lowering the price for customers from tonight, so that they can benefit from the Chancellor’s announcement sooner."
Meanwhile, Morrisons said it would lower prices by 5p per litre. "Following the chancellor’s announcement regarding the 5p duty reduction on fuel, prices at Morrisons petrol station pumps will reduce by 5 pence at 6pm this evening," the company said.
Tesco (TSCO.L) said it will be reducing the price of fuel at our petrol filling stations by 6p from Wednesday evening.
The average cost of a litre of petrol at UK forecourts on Tuesday was 167.30p, while diesel was 179.72p, with the cost of filling an average 55-litre family car to hit £100, according to figures from RAC.
Despite Sunak's cut, industry experts said the move represents just a "drop in the ocean" and doesn't go far enough to protect drivers as prices soar to unprecedented highs at the pumps.
While the RAC welcomed Sunak's 5p fuel duty cut it said that this was a "drop in the ocean" and that the reduction would take prices back to where they were just over a week ago.
RAC head of policy Nicholas Lyes said: "With the cut taking effect at 6pm tonight drivers will only notice the difference at the pumps once retailers have bought new fuel in at the lower rate.
"There’s also a very real risk retailers could just absorb some or all of the duty cut themselves by not lowering their prices.
"Temporarily reducing VAT would have been a more progressive way of helping drivers as the tax is applied at the point the fuel is sold."
Energy giant BP (BP.L) told Yahoo Finance UK that "the 5p fuel duty cut (6p with VAT) will be passed on at its the sites it operates in line with the chancellor's announcement".
The move puts pressure on rival Shell (SHEL.L) and other grocers are also facing more calls to follow suit and reduce fuel prices at UK forecourts. Shares in BP and Shell were up 4.9% and 3.6% respectively.
Shell did not respond to a request for comment from Yahoo Finance UK.
Luke Bosdet fuel price spokesman for the roadside assistance firm AA, welcomed Sainsburys’ and Asda’s announcement but said other large petrol retailers must follow suit. "[We] definitely need the other supermarkets to step up also, and tonight".
Watch: Rishi Sunak announces 5p cut to fuel duty until March 2023