2p cut starts petrol price war

ASDA kicked off a fuel price war yesterday by announcing it would slash the cost of petrol and diesel by up to 2p from today.

The move – the first price cut on forecourts since November – was swiftly matched by Morrisons and then Tesco. It is a boost for millions of motorists who have seen the average price of a litre of unleaded rise from 101.37p to 120.06p in little over a year.

This has pushed up the cost of filling up a tank by more than £10, according to the RAC. Together with rising food costs, it has put pressure on household budgets and helped inflation hit a twoyear high of 1.8 per cent.

Last night experts said the price cut was overdue. Wholesale prices – the amount retailers pay for petrol and die- sel – have dropped by an average 2p a litre in the past four weeks and the cost of oil has fallen from $55 (£45) a barrel to just under $52.

For years retailers have faced criticism for being slow to pass on savings while being only too keen to hike their prices when wholesale costs go up.

But Asda took the initiative by setting a new national price cap of 114.7p per litre for unleaded petrol – more than 5p less than the national average – and 116.7 per litre for diesel at its 301 filling stations across the UK.

Like at its rivals, fuel costs at Asda vary across the country. But it is the only supermarket with a national price cap. Morrisons, which charges an average of 116.9p for unleaded and 118.4p for diesel, responded by saying it would reduce prices by up to 2p a litre from today at its 333 filling stations.

Tesco, which on average charges 117.6p for unleaded and 119.6p for diesel, said it would also cut fuel prices by up to 2p per litre at its 500 forecourts. Sainsbury’s has not matched the move, despite charging an average of 119.3p per litre for unleaded and 121.1p for diesel. It said it always keeps its prices under review.

RAC fuel spokesman Simon Williams said: ‘This is the perfect spring gift for motorists. No doubt other retailers will follow suit and we will see prices on every forecourt come down. We’re very relieved that retailers have acted without any need for outside encouragement.’