Fuel price update January 2011

Highest monthly petrol price leap bodes badly for future

21 January 2011

Highest monthly petrol price leap bodes badly for future

UK petrol prices ended the first decade of the 21st century with their biggest monthly leap – up by a staggering 6.13p/litre or £3.07 a tank, according to the latest AA Fuel Price Report.

Between mid December and mid January, UK average petrol prices rose from 122.14p/litre to a new record of 128.27 while diesel prices went up 6.56p a litre, from 126.19p/litre last month to 132.75 now.

Previous record rise

The previous highest monthly petrol price increase since 2000 was 5.6p a litre in June 2008. In May 2008, monthly diesel prices soared 6.8p/litre, leading to the 133.25p record in July 2008, which still stands – just.

Duty and VAT

A 0.76p a litre increase in fuel duty on 1 January and VAT rising to 20%, adding around 2.5p more to the pump price, accounted for the lion's share of the latest increase. However, an increase of around 5% in wholesale costs, driven by oil prices surging past $90 a barrel, have ensured that every day has been a record for petrol prices since 10 December 2010.

A year ago

Compared to a year ago, petrol now costs 16.3p/litre more and diesel 18.98. Filling a typical 50-litre fuel tank has risen £8.15 for petrol and £9.49 for petrol. For a two-car family, the monthly cost of petrol has increased by £34.61.

Falling sales

Government figures show a 3.4% fall in petrol sales in the third quarter of 2010 compared to the same period in 2009.

A comparison of retail petrol sales from January to September 2010 with the same period in 2007 shows a 2.22 billion-litre or 12.8% decline.

Retail diesel sales remain robust, up 0.95 billion litres, but depressed car sales in 2009 and 2010 have not provided the boost from drivers switching to diesel that characterised 2007 and the first half of 2008.

Looking at combined sales of petrol and diesel, UK retailers in the first nine months of 2010 sold 1.27 billion fewer litres compared to the boom time in 2007 – echoing the £0.2 billion loss of tax revenue from 2009/10 fuel receipts predicted by the Labour government in its 2009 Pre-Budget Report.

Latest fuel price report »


More settled weather has brought the average price of diesel in Scotland (133.2p) more in line with other rural areas.

Wales and Northern Ireland are charging a third of a penny more to make them the most expensive areas in the country at 133.5p a litre.

Yorkshire and Humberside are cheapest, averaging 131.9.

Regional average petrol prices range from 127.3p a litre in Yorkshire and Humberside to 129.1 in Northern Ireland.

Unless the government can restore a more affordable level of fuel prices...the falling tax return from constantly rising prices will reduce the income from the Treasury

Edmund King, AA President


Petrol remains the battleground for supermarket pricing, with Morrisons and Sainsbury on average within a penny of Asda, the cheapest retailer.

For non-supermarket retailers, average petrol prices for Jet and Shell are lower than Tesco, but around a penny or more off the pace of the cheaper supermarkets.


"The huge fall in petrol sales shows that many drivers cannot afford to fill up. AA/Populus research shows that two-thirds of drivers are cutting back on car use, other spending or both," says Edmund King, the AA's president.

"Unless the Government can restore a more affordable level of fuel prices, by scrapping the fuel duty increase in April and bringing in a fuel price stabiliser, the falling tax return from constantly rising prices will reduce the income to the Treasury. Sooner or later, politicians will have to face reality – more and more drivers cannot afford these prices, they are pushing up inflation and taking money from other consumer spending."

UK pump price data provided by Experian Catalist