Pump price warning as wholesale costs rise

Petrol and diesel pump prices are predicted to rise, after the cost of a barrel of oil went up by $10 in July.

The average price of petrol rose in July making for the second consecutive monthly increase, while diesel remained stable, according to data from RAC Fuel Watch.

A litre of unleaded across the UK now costs 145p, up a penny since the start of the month and nearly 2p since the beginning of June.

The wholesale price of petrol rose 6p a litre from July 19 on the back of the rising cost of oil – the average price has increased by nearly 2p in that time.

Diesel stayed the same at 146p (145.84p), ending a run of eight months of falling prices.

The price of oil went up by $10 a barrel in July, rising to $85.56 by the close of the month – a price not seen since mid-April. This has caused the wholesale price of both fuels to increase – 7p for unleaded and nearly 9.5p for diesel.

RAC fuel spokesman Simon Williams said: “July marks a turning point in the year for fuel prices as diesel stopped falling while petrol recorded its second consecutive monthly increase. But more concerning is the fact that oil has gone back up to $85 a barrel, causing wholesale prices to rise significantly.

“While we’re fortunately not in the kind of upward price spiral we experienced last year, it feels like the better times at the pump are over for the time being. If oil producers continue to curb production then bigger forecourt price rises could be on the cards.”

The RAC’s analysis of the data shows that current pricing has led to a squeeze on previously inflated retailer margins.

“We’re currently seeing a return to them making an amount per litre more similar to their longer-term averages,” continued Williams. "The big question now is how quickly and how far pump prices rise.”

The RAC is now waiting to see how quickly prices rise and whether the supermarkets, which dominate UK fuel retailing, will operate with smaller margins that are closer to their longer-term averages, or whether they look to make more per litre than they have historically.

Williams said: “We sincerely hope we won’t see them shoot up like the proverbial rocket as this would indicate the Competition and Markets Authority’s fuel market investigation findings and recommendations have not had an immediate impact.

“Encouragingly, there has so far been very little upward movement from the big four supermarkets but only time will tell.”

Regional pump prices