Why Have Supermarkets Cut Fuel Prices for Summer Holidays?

A number of British supermarkets have cut the price per litre on petrol and diesel. The reductions are up to 2p per litre, despite predictions that prices may rise following the decision to leave the EU. It’s great news for anyone who has to drive for work, or for leisure. Not so many people are sure why though. Read on for an explanation of why fuel prices have dropped.

Drop in price

At the beginning of August 2016, Asda announced a national cap on petrol and diesel prices. The prices are capped at 105.7p per litre of unleaded petrol, and 106.7p per litre of diesel. Similarly, Tesco made a 2p drop per litre on their fuel and Morrisons cut 2p off unleaded per litre, with 1p off a litre of diesel.

“We always pass on any savings we can make to our customers, so it’s great to see that costs have dropped,” said Andy Peake, Director at Asda, while Peter Cattell, Tesco fuel director, suggested the drop in price was to help customers enjoy the holidays even more.

A cut in fuel prices paid by the retailers themselves seems to be the real reason for the cut. According to the RAC, the fuel prices have been falling since around June and the price drop for customers should have come sooner. “Hopefully other supermarkets will follow suit, which will drive prices down across the country”, added Simon Williams, RAC spokesman.

Even lower

Despite the pre-Brexit predictions, it’s now thought the price of fuel could have been even lower if the pound wasn’t suffering from the Brexit impact. The British currency is down by over 10% on last year. This fall in currency affects the amount supermarkets have to pay for fuel when trading with other countries. So without the fall, it’s estimated fuel prices could have been another 4p per litre cheaper.

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