March 2014 fuel price update

Inflation-hit earnings hold back a driver and fuel retailer revival

Inflation-hit earnings hold back a driver and fuel retailer revival

Inflation-hit earnings hold back a driver and fuel retailer revival

Mid-March pump prices and fuel retailer offers have given the fortunes of UK drivers a distinctively spring-like feel.

However, government figures show that earnings adjusted for inflation are back to 2002 levels, maintaining huge pressure on those who use and those who sell road fuels, the AA Fuel Price Report notes.

Turning the corner

A sense of turning the corner on crippling pump prices comes with:

  • Petrol forecourt prices remaining at a three year low, averaging 129.46p a litre in mid March compared to 129.63p last month. A year ago petrol averaged 138.42p a litre.
  • Diesel prices at their lowest since July 2012, averaging 136.59p a litre in mid March compared to 137.02p last month – with wholesale price reductions pointing to a further 1p to 2p-a-litre fall shortly. A year ago diesel averaged 145.24p a litre.
  • The petrol price gap between smaller rural/coastal towns and larger towns with competitive retailers remaining in the 2p to 3p range, as opposed to the 4p to 6p of last year.
  • The government’s freeze on fuel duty continuing into a fourth year – while 11 of 28 EU countries have or are due to increase theirs this year, including France, Holland, Italy and Sweden.
  • Continued price cutting between supermarkets with petrol as low as 125.7p a litre, and a more innovative and fairer approach to money off fuel from in-store spending (Tesco).
  • A small increase in the number of petrol stations after years of decline*.
  • Improved weather after the wettest winter on record, and little sign of a repetition of last year’s second coldest March on record.

Earnings down

However, the encouraging outlook at the fuel pump has been tempered by an ONS report at the end of February stating that inflation has turned an average 2%-a-year increase in earnings into an overall 8% decrease between 2009 and 2013. By April 2013, weekly earnings for full-time employees in the UK “were similar to the level seen in 2002” when adjusted for inflation**.

Still cutting back on car use

The impact of this was already being reflected in an AA-Populus survey at the turn of the year. Despite a 7p-a-litre fall in the price of petrol between mid September and mid December, the cost of fuel was still forcing 60% of AA members to cut back on car use, other spending to compensate, or both. That rose to 70% among lower-skilled manual and service workers and pensioners.

Supermarket sales figures released this week show that fuel continues to sap performance further while ONS retail sales statistics, released in late February, showed that fuel stores were the only sector to suffer a decline in January sales – despite the biggest fall in average store price.

Appalling weather up until 10 days ago will have reduced car use and fuel consumption

Edmund King, AA president

Appalling weather

“Appalling weather up until 10 days ago will have reduced car use and fuel consumption. However, official figures on inflation-hit earnings reveal a more persistent dark cloud hanging over the ability of UK drivers to use their cars. This is clearly making business difficult for fuel retailers too,” says Edmund King, the AA’s president.


The AA welcomes supermarkets’ competitive attempts to revive the affordability of driving, both through a fairer approach to fuel vouchers and pricing between towns. The continued freeze on fuel duty also helps lower-paid workers, pensioners and job seekers to get around by car and fulfil their potential in the workplace and as consumers.


Diesel pump prices are at their lowest for 20 months and this will also help businesses across the board. Also, the screening of Russian diesel as a precaution against blocked fuel filters, which have hit hundreds of northern drivers over the past two winters and cost retailers in compensation claims, is a particularly helpful move by the fuel industry.

Nationally and regionally

Across the UK, Yorkshire and Humberside remains the cheapest area for petrol averaging 129.1p a litre. Northern Ireland may still be most expensive, but at least its average has caught up with the rest of the country and fallen below 130p a litre.

At 136.3p a litre, London shares its position as cheapest area for diesel with the West Midlands, while Scotland is most expensive at 137.3p.

(21 March 2014)

Fuel price data supplied by Experian Catalist

Wholesale price data provided by

Number of fuel retailer sites: 2012 – 8,608, 2013 – 8,613. Source: Experian Catalist

** Patterns of Pay: Estimates from the Annual Survey of Hours and Earnings, UK, 1997 to 2013. Source: ONS, 27 February 2014


Flower power

Don't forget the basic checks every couple of weeks;

Fuel, Lights, Oil, Water, Electrics, and Rubber