Increased margins at supermarkets cost drivers nearly £1bn more

The CMA said average supermarket fuel margins rose by 6p per litre between 2019 and 2022.

Petrol station - file picture
Author: Chris MaskeryPublished 3rd Jul 2023
Last updated 3rd Jul 2023

A new report says drivers paid nearly £1 billion more for supermarket fuel due to higher margins.

The Competition and Markets Authority (CMA) said there was not enough competition between fuel retailers.

Their investigation found that average supermarket fuel margins rose by 6p per litre between 2019 and 2022.

That led to an estimated combined additional cost of “around £900 million” for customers of Asda, Tesco, Sainsbury’s and Morrisons, a report stated.

The inquiry also found that an increase in margins on diesel across all fuel retailers cost drivers an extra 13p per litre during the first five months of this year.

Recommendations for cheaper fuel

The CMA recommended that the Government introduces legislation requiring retailers to provide up-to-date pricing information available in an accessible format.

This would allow drivers to compare pump prices at different sites through apps or satnavs.

The watchdog also called for a new fuel price monitoring body to be created to hold the industry to account.

Supermarket giant Asda was fined £60,000 by the CMA for failing to provide relevant information in a timely manner.

An Asda spokesman said the fine related to “two individual alleged technical breaches” in the way information was shared, and insisted “we engaged fulsomely” with the inquiry.

"Something needs to change"

CMA chief executive Sarah Cardell said: “Competition at the pump is not working as well as it should be and something needs to change swiftly to address this.

“Drivers buying fuel at supermarkets in 2022 have paid around 6p per litre more than they would have done otherwise due to the four major supermarkets increasing their margins.

“This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations.

“We need to reignite competition among fuel retailers.”

Cost of living crisis

Interest rates and inflation go up

Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.

Energy bills

The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.

Food prices

The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.

Prices at the pumps

The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.

Average cost of filling up a car with petrol hits £100

On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.

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