Petrol and diesel prices reach new record high

Fuel prices have hit a new record high at the pump across the UK, tightening the squeeze on UK consumers, the motoring organisation the AA has said.

Over the weekend petrol reached 148.02p a litre, while diesel hit a new record high of 151.57p a litre last Thursday.

Fuel previously hit a record in November, before wholesale and retail prices fell back.

"The cost of living crisis has been ratcheted up yet another notch," said Luke Bosdet of the AA.

The RAC's fuel spokesman Simon Williams said the price of filling a 55-litre family car was now an "eye-watering" £81.41.

"With the oil price teetering on the brink of $100 a barrel and retailers keen to pass on the increase in wholesale fuel quickly, new records could now be set on a daily basis in the coming weeks," he said.

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Fuel prices at the pump are driven largely by the wholesale price of energy which has shot up due to tensions over whether Russia will invade Ukraine.

On Monday, oil prices hit their highest level since 2014, reaching $95.56 a barrel.

If the situation in Ukraine deteriorates, oil and gas supplies from Russia to Europe may be interrupted, pushing up wholesale prices further.

The supply of oil and gas has already struggled to keep up with growing demand as the global economy picked up in recent months as Covid restrictions eased.

The RAC's Mr Williams said: "On a positive note, retailer margins - which were the reason drivers paid overly high prices in December and January - have now returned to more normal levels of around 7p a litre."

He said the big four supermarkets, which dominate fuel sales, should "play fair" with drivers by keeping their profit margins low.

Day-to-day prices for food, household bills and other items such as used cars, have risen sharply in recent months, in part due to rising energy prices.

The Petrol Retailers' Association (PRA), which represents independent retailers, said it would continue to ensure that the price of fuel was "as competitive as possible".

But tensions between Russia and Ukraine, as well as other key factors such as tightness in the oil market and the dollar-sterling exchange rate, were likely to cause further volatility in the oil price, said Gordon Balmer, PRA's executive director.

Inflation

UK inflation is now at a 30-year high of 5.4%. New inflation figures for January will be released by the Office for National Statistics on Wednesday.

Mr Bosdet said the AA had surveyed 15,000 of its members after prices spiked at the end of last year and found higher fuel prices were leading 43% of them to cut back on the amount they used their car as well as other areas of spending.

Mike Johnson at the energy consultancy Portland Analytics said what happens to energy prices next depended both on the situation in Ukraine and whether the Organisation of Petrol Exporting Countries (Opec) was able to boost supply.

"Opec and its allies have struggled to increase production in line with their output targets due to a combination of production outages and technical issues, whilst demand continues to rise," he said.

While oil producing nations had agreed to increase production by 400,000 barrels per day in February Mr Johnson said it seemed unlikely that target would be met.