Drivers in the United Kingdom are facing increased fuel prices amid concerns over weakening competition in the market, according to recent observations by the Competition and Markets Authority (CMA). Despite a dip in wholesale costs, petrol and diesel pump prices have surged, with petrol prices up by 11.1p per liter and diesel by 13.9p per liter from May to October 2023.
The CMA's scrutiny of the road fuel market, which followed their July 2023 report highlighting weakened competition, revealed that global factors, including crude oil prices, were partly to blame for the price hikes. However, even as wholesale costs fell in September and October, retail prices remained elevated. This indicates that fuel retailers have been reaping the benefits without passing on savings to consumers.
Supermarkets, traditionally known for offering competitive pricing, also exhibited troubling trends. Although supermarket fuel margins decreased during the summer months and consistently offered discounts compared to other retailers, with Asda often leading the way, these margins have significantly increased since August. The CMA noted that while supermarkets' strong price leadership can be seen as positive, it raises concerns about potentially weakened competition overall.
Sarah Cardell, CEO of the CMA, voiced her apprehensions regarding the impact of this lackluster competition on pump prices. In response to these findings, the UK government is set to introduce mandatory legislation for a real-time pricing data scheme, aiming to foster greater transparency and competition with consultations expected later this year.
Simon Williams from RAC has been vocal about his criticism of major fuel retailers who he claims are exploiting drivers with excessive profit margins. He pointed out that despite daily price publishing by large retailers, there has been no significant improvement in competition or reduction in prices.
The CMA has announced plans to monitor future spreads and margin developments closely and will investigate any evidence of price feathering following peaks in wholesale prices. The authority remains vigilant about significant market volatility and is committed to observing wholesale price trends with keen interest.
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