Petrol drops below £1 a litre

Drivers benefit from cut-throat supermarket competition

27 October 2008

As average UK petrol prices dropped through £1 a litre over the weekend for the first time in almost a year, new AA figures reveal that more than two-thirds of drivers benefit directly from cut-throat supermarket competition.

In Sunday trading, the cost of petrol tumbled to 98.63p per litre with diesel 111.00p, taking the price of petrol back to where it was around 30 October last year. Compared to the record high price of 119.7p per litre in mid July, this has put nearly £45.16 a month back into the budget of a family with two petrol cars .

The influence of supermarkets on UK fuel sales is illustrated by new figures from the AA/Populus survey panel showing that 68 per cent of drivers generally buy their fuel there. This would partly explain why the UK petrol price has fallen four times more quickly in the past fortnight than between mid-July and early October when only two of the major supermarkets chased prices down and the others matched local prices where they needed to.

The AA Populus survey of 12,000 motorists found that more than half of them (53%) could be swayed by lower prices on the forecourt boards although 71 per cent tended to buy their fuel at the same place in normal times.

Over 65s show themselves to be the most loyal buyers of supermarket fuel with 50 per cent giving a strong preference for filling up there, compared to an average of 43 per cent across the age ranges that showed a strong preference.

AA comment

"The AA/Populus findings help to explain the dramatic reductions in the average price of UK fuel since October 10 when all the supermarkets decided to engage in a fierce price war – rather than just half of them matching prices locally," says Edmund King, the AA's president.

"Asda, and to some extent Morrisons, trail-blazed lower prices throughout the summer, but it took the size and the full participation of the others to produce the record falls in price seen over the past fortnight."

"Although the AA is very grateful for recent supermarket price cuts, it is concerned that lower-income and single pensioners, who are among the most loyal buyers of supermarket fuel, may be missing out on the benefits of supermarket fuel vouchers. There will be many who do not spend £50 at any time on groceries and therefore cannot enjoy the 5p off a litre offer at the bigger supermarkets. A re-introduction of the 2p off from a £20 spend or 3p off from a £30 spend, seen when these offers first appeared, may be a fairer reward for pensioner loyalty."

Read the latest AA monthly fuel price report »

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27 October 2008