After consecutive falls in prices, according to the latest RAC Fuel Watch report, published at the end of January, petrol and diesel prices could be set to rise. At the same time, forecasts for utility prices, including electricity, are expected to fall, with wholesale energy prices falling substantially recently. Is this the pendulum switch back to electric vehicles in the used market?
January saw average petrol prices fall to their lowest level since Russia’s invasion of Ukraine last year. Across the month, UK petrol prices fell by 3p per litre. It meant that petrol ended the month at an average of 148.89p per litre. Average diesel prices fell further, down by 4p per litre to 170.37p per litre. As recently as June last year, the RAC was reporting the average price for a litre of petrol was £191.43, over 40p per litre higher than today’s costs.
In its latest report, the RAC suggested that prices of petrol and diesel may start to rise, with wholesale oil prices showing signs of increasing during January. More recently, wholesale rises have moderated. However, one area of upward pressure remains in the form of UK fuel duty rates.
Last March, the Chancellor of the Chequer, then Rishi Sunak, cut UK fuel duty rates by 5p for 12 months to help struggling families manage the soaring price of fuel alongside other rising household costs. The step was set to last for 12 months, so at this time, on 23 March 2023, this reduction could end.
Added to this is the possibility that petrol and diesel might go up by around 12p a litre. Such a move was detailed in the economic and fiscal outlook document published by the Office for Budget Responsibility last November.
Nothing is guaranteed, and it seems likely that plans for fuel duty can be expected to feature Chancellor Jeremy Hunt’s Spring Budget. However, sooner or later, increases seem inevitable.
Debbie Mckay, Commercial Director of Motor Sales