Asda trims fuel by 5p-a-litre after criticism for not cutting prices

After recently being accused of ‘holding on to huge margins for an expensive life’ and failing to pass on cheaper fuel costs to motorists, a supermarket has shown the first sign of instigating a fuel price war in the run-up to Christmas.

Analysis of daily changes in fuel prices has shown that over the past two days Asda has cut the price of petrol by 4.5p a liter at its 320 UK filling stations – and cut the price of diesel by 5.5p – without any announcement.

Before the pandemic, supermarkets typically made a big fuss about how much they lowered their fuel prices in the run-up to the holiday season to boost spending in their stores.

The RAC, noting Asda’s recent cut in prices, said the move was likely an ‘admission that they should have come sooner’ but says there are reasons to cut prices by a further 10 pence per litre.

Asda’s recent cuts now mean an average of 153.5 pence for petrol and 176.7 pence for diesel.

This is about 4 pence less than the UK average on Wednesday (157.8 pence for unleaded and 181.3 pence for diesel), more importantly, it’s about 2 pence cheaper than rival supermarkets.

Still, the RAC says the move to make a significant price cut without making an announcement was surprising.

The automotive group’s fuel spokesman, Simon Williams, said: “While we are pleased that a major supermarket chain has finally heeded our calls to pass on the massive drop in wholesale prices of both fuels, the fact that these price cuts have been quietly is certainly admitting that they should have come much sooner.’

Traditionally, when one of the ‘big four’ supermarkets cuts in this way, it unleashes a ‘fuel price war’ and the others – Morrisons, Sainsbury’s and Tesco – follow suit.

The timing of a possible fuel price war between the major supermarkets would be welcomed by the hundreds of thousands of commuters who will have to drive to work for most of next week because of the planned rail strikes due to take place in four days.

With the RMT union also set to lead a massive strike by around 40,000 rail workers over Christmas, cheaper petrol and diesel prices will also be hugely received by those who have little choice but to drive rather than take the train to see family and friends. visit during the holidays.

“We are urging the other three supermarkets to quickly catch up – or go even further – and provide drivers with much-needed relief from high prices the next time they fill up,” Williams added.

“If they do, it will reduce the average price of petrol in the UK from the current 157.8 pence, benefiting motorists everywhere.”

Still, he says there is potential for the rival supermarkets to lower prices further.

The RACs analysis of recent wholesale prices shows that there is ‘easily room for a further 10 pence a liter from the current average price of both petrol and diesel’.

The RAC said the lack of an Asda announcement on the cuts was likely an ‘admission that they should have come sooner’ after the car group criticized supermarkets for ‘holding on to huge margins for a living’ by not passing on cheaper wholesale costs to motorists

Earlier this week, the motoring body said the four major supermarkets had failed to lower their pump prices, leaving retailers with profit margins of more than 20 pence for every litre, which it described as a ‘scandal’.

It also comes in the same week that the Competition and Markets Authority released an update on its investigation into the fuel retail sector, saying it had found evidence of ‘rocket and feather’ prices in 2022.

The AA said today that fuel prices should be much lower than the current UK average, not least because both wholesale costs for petrol and – as of this week – diesel are now back below pre-war levels in Ukraine started and oil prices went up.

Although wholesale diesel now costs less than it did on Feb. 24 — when Russia first invaded Ukraine — the average pump price for the fuel today is 28 pence higher than on that date.

The AA said it “accepts that there will always be some lag between cost and pump price movements,” but says diesel savings should soon be passed on to the pump to help run and transport costs and thus reduce inflation.

‘Of course the collapse in diesel costs in November has been rapid and it will take time to catch up with pump prices, but the difference between costs and selling prices is huge. Fuel contracts will also take time to update, but the most immediate victims are the small businesses, artisans and rural businesses who are being denied a major reduction in their operating costs,” explains Luke Bosdet, the AA’s fuel pricing expert.

A 28p drop in the average diesel pump price cuts £22.40 off the cost of filling an 80-litre Transit van tank. It can result in a discount of almost 3 percent on the delivery costs.’