Rocketing UK fuel prices mean that two-car families are now spending almost £40 a month more on petrol than a year ago.
Crude oil prices have risen 20% since the Saudi-led Opec cartel agreed its first production cut in eight years at the end of November, from $46.50 (£37) a barrel to about $56 now. This has pushed petrol prices in the UK higher, exacerbated by the pound’s slide against the dollar, as oil is traded in the US currency.
The UK’s average petrol price rose to 120.11p a litre this week, up 0.63p from mid-January, according to the AA. Diesel is now 122.32p a litre, 0.34p more expensive than this time last month.
Compared with a year ago, petrol drivers are paying 18.16p a litre more (101.95p), while diesel drivers are 21.30p a litre (101.02p) worse off. Filling a typical petrol tank costs £9.99 more, while a transit-size fuel tank costs £17.04 more to refuel.
This means a family with two petrol cars is now spending £240.22 on petrol each month, compared with £203.90 in February 2016.
Petrol prices dropped sharply in early 2016 when an oil glut pushed the cost of crude below $27 a barrel. Iran ramped up production after international sanctions on the country were lifted.
AA spokesman Luke Bosdet said someone with a fixed budget of £30 a week, spent on five days’ driving to and from work, might now find that amount only covered four days’ driving. “This means raiding some other part of the family budget. It’s becoming quite a tight squeeze.”
Edmund King, the AA’s president, said motorists should shop around: “Drivers need to keep their ears and eyes open to locate lower pump prices. Along the A3, from Portsmouth towards London, supermarket petrol varies by as much as 8p a litre.” On a standard VW Golf-type vehicle that means a potential saving of up to £4 per tank.
Official figures released earlier this week show that surging fuel prices have helped push consumer price inflation to its highest level in more than two years. The rise in headline inflation to an annual rate of 1.8% was mainly caused by pricier fuel, which went up 3.4% between December and January. Higher oil costs can also push up household energy bills as wholesale gas prices tend to track the price of crude.
As higher inflation eats into people’s pockets, they are expected to rein in spending. Consumer spending has been surprisingly strong since the Brexit vote and has kept the economy growing at a brisk pace, but City economists warn this could change in coming months.
