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February 2017 fuel price update

Supermarkets lose the pump-price plot

Competitive independents seize the chance to undercut the Big Four

17 February 2017

Driver confidence in supermarkets as the bastions of cheapest pump prices has been rocked over the past month.

The gap between what the Big Four and non-supermarket rivals charge on average for petrol has fallen to below 3p/litre for the first time in 12 months.

And the latest AA Fuel Price Report reveals that the one of the independent retailer chains is, on average, undercutting the second biggest of the Big Four supermarkets (by market share) on both petrol and diesel prices.

Fuel price reports

This week saw:

  • The UK’s average petrol price reach 120.11p/litre, up 0.63p on mid-January’s 119.48p.
  • Diesel is now at 122.32p/litre, a third of a penny more expensive than this time last month when the cost averaged 121.98p/litre.
£9.99 more to fill up

Compared to a year ago, petrol drivers are paying 18.16p/litre more (101.95p) and diesel drivers are 21.30p/litre (101.02p) worse off.

Impact-wise, filling a typical petrol tank costs £9.99 more and a Transit-size fuel tank is £17.04 more expensive to refuel.

A family with two petrol cars is now spending £240.22 on petrol each month, compared to £203.90 in February 2016.

Sinking sales feeling

Little wonder then that some forecourt owners are beginning to re-experience the sinking sales feeling, with commentators in the industry saying that trading since Christmas has been worse than usual - one retailer saying that January sales fell ‘off a cliff’.

On Tuesday, official statistics showed that rising fuel prices had helped to push UK inflation to its highest level since June 2014.

It therefore comes as a surprise to see a major supermarket weaken its fuel price appeal to increasingly cash-strapped driving families. However, that has opened the door for many non-supermarket retailers to match or undercut their bigger rivals. 

The result of the change in supermarket pricing has been to squeeze the supermarket versus non-supermarket petrol price gap to its smallest in 12 months. Indeed, the last time the Big Four’s average petrol price was less than 3p a litre cheaper than its rivals’ was when the non-supermarkets were catching up with £1-a-litre pump prices at the start of last year.

Savings can be as much as £4-£5 a tank on some routes and drivers using fuel price apps, such as the AA App, will be discovering the value of searching for better deals
Edmund King, AA president

 

"UK average petrol prices have hit a plateau of around 120p/litre for more than a fortnight, the perfect setting for local price variety and shopping around. Savings can be as much as £4-£5 a tank on some routes and drivers using fuel price apps, such as the AA App, will be discovering the value of searching for better deals,” says Edmund King, the AA’s president. 

“We accept that it is the prerogative of any retailer to charge what they like for fuel and, in the past, we have seen supermarkets switch to fighting their price wars in the aisles rather than on the forecourts. However, this latest change of tactic comes after nearly 15 months of tight fuel-price competition among supermarkets.

“Drivers need to keep their ears and eyes open to locate lower pump prices. That may be a case of buying fuel in a neighbouring town with more competitive prices. Along the A3, from Portsmouth towards London, supermarket petrol varies by as much as 8p a litre – a difference we used to associate with the gap between motorway and non-motorway prices.”

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