Latest review of pump prices causes concern
Pump prices on fuel forecourts is still higher than should be expected.
That is the conclusion of a new report from the Competition and Markets Authority (CMA)
Supermarket fuel margins in 2023 year-to-date are higher than in previous years on a percentage basis.
However, supermarket fuel margins are slightly down on 2022. From May, the average monthly fuel margin has fallen month-on-month, from 11.9ppl in May to 7.3ppl in August.
Despite this, the August figure is higher than the annual average for years prior to 2021. When it comes to supermarkets, which are usually the lowest price suppliers to motorists, fuel margins may have increased since August.
While supermarkets are still the price discounters compared to other suppliers, the differences are smaller than pre 2021.
However, the CMA has seen fewer cases of non-supermarket retailers being cheaper than the supermarket average compared to late 2022 and early 2023 (though this is more common than prior to 2022).
Asda remains, on average, the cheapest supermarket provider across both types of fuel.
Overall, the picture on recent developments in the market is mixed.
“It’s very disappointing that the CMA has found that major fuel retailers are still taking far bigger margins than they have done in the past,” says RAC fuel spokesperson Simon Williams. “Drivers are still being taken advantage of at the pumps” he adds.
The CMA believes reduced retail spread and falling supermarket fuel margins in the summer are positive. They also acknowledge evidence that suggests stronger price leadership by the supermarkets.
However, they stress that this should not be overstated. Supermarket fuel margins remain above those seen prior to 2021, and the. recent data suggests that competition forcing lower pricing hs weakened.
Following the official analysis of the market earlier this year, commissioned by the government, ministers asked retailers for ongoing live publishing of prices in order that motorists could find the lowest prices. It was hoped this would add to competitive forces and further lower prices. Most of the big retailers have voluntarily begun publishing the data.
However, Williams says “our data shows this has had no effect whatsoever in improving competition and lowering prices”.
“In fact, we believe the situation is currently worse than ever as the wholesale fuel market is down significantly, yet forecourt prices are falling like the proverbial feather.
The RAC want to see all prices posted live and the CMA given more powers to act against retailers that are not lowering prices fast enough in line wit reductions in wholesale prices.
Eyes on the prize
In response, the CMA says it will consider how both spreads and margins develop in its next monitoring update. It admits the wholesale market remains volatile with the ongoing wars in Ukraine and Palestine, along with ongoing economic and inflationary pressures. It says it will need to continue to monitor the market to understand if the trends will continue.
The big issue under ongoing review is how fast, or not, retailers pass on reductions in wholesale prices.
Given the recent wholesale price increases, the CMA says it will be watching carefully to see if there is any evidence of feathering practices emerging as wholesale prices stabilise or fall.