Chancellor urged to cut VAT on fuel

CHANCELLOR Rishi Sunak has been urged to cut VAT on fuel as drivers continue to face record pump prices, with the South West among the hardest hit regions in the country.

The RAC issued the plea after data firm Experian Catalist said the average cost of a litre of petrol at UK forecourts reached a new high of 153.50p on Thursday, up from 152.20p on Wednesday.

Oil prices have spiked due to concerns over the reliability of supplies since Russian troops invaded Ukraine last week. The cost of diesel rose from 155.79p to a record 157.47p over the same period.

In the Westcountry, a number of filling stations temporarily ran out of fuel this week as motorists fearing shortages and even higher prices started panic-buying.

Prices at Devon filling stations for a litre of unleaded, ranged from a low of 142.90p at some supermarket forecourts to 171.90p at a motorway services. Across Cornwall, pump prices were generally spread between 146p per litre up to 153.90p.

RAC fuel spokesman Simon Williams said: “This latest round of rises means the price of a litre of unleaded has now gone up by nearly 4p in just a week, adding £1.86 to the cost of filling a 55-litre family car.

“Diesel has gone up by a similar amount over the same period, adding over £2 to the cost of filling up.

“The RAC is now calling on the Treasury to look at an emergency, temporary cut in the VAT rate levied on fuel, to ease some of the pain drivers are facing and to better protect them from upcoming rises.” VAT is charged at 20% on petrol and diesel.

SOARING inflation is continuing to bite for British households as petrol prices struck new record highs and the cost of everyday items such as stamps jumped further.

Financial experts have warned that “at some point soon consumers will not be able to cope with even higher prices” as the conflict in Ukraine helps to stoke the cost of living crisis further.

Data from Experian Catalist said the average cost of a litre of petrol at UK forecourts reached a new high of 153.50p on Thursday, up from 152.20p on Wednesday.

The RAC has urged for support from the Treasury as the figures also showed that the cost of diesel rose from 155.79p to a record 157.47p over the same period.

Oil prices have spiked due to concerns over the reliability of supplies since Russian troops invaded Ukraine last week.

It comes after the Consumer Price Index (CPI) reached 5.5% in January, although it is expected to accelerate once again.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said inflation could yet strike more than 8% if the invasion of Ukraine drives surges in commodity prices.

The price of wheat, one of Ukraine’s largest export products, hit a 14-year high this week, putting pressure on the cost of everyday food products such as bread.

Packaging prices have also lifted on the back of a surge in the cost of aluminium, as a significant amount if sourced from Russia.

The Royal Mail also announced on Friday that the price of a first class stamp is to increase by 10p to 95p.

Second class stamps will increase by 2p to 68p, with the new prices coming into effect on April 4. The additional pressures on household budgets come as energy prices are set to soar from the current price cap, which is set at £1,277 per year for the average household. It is scheduled to rise to £1,971 from the beginning of April and industry analysts have warned that this could surge by a further £1,000 in October if wholesale prices do not stabilise.

Those who eat out are also facing higher menu prices from April, with reduced VAT for hospitality due to end.

Meanwhile, used car prices have also continued to surge over the past year, with a shortage of new cars increasing pressure on supply.

Russ Mould, investment director at AJ Bell, said: “With the invasion of Ukraine by Russia now into its second week, stock markets continue to battle the threat of even higher inflation and a potential economic slowdown.

“If costs are going up again, corporates must either stomach lower profit margins or risk passing on the costs to the end user.

“At some point soon consumers will not be able to cope with even higher prices, so corporates face a big demand test.”