Fuel Costs Rise To Two-Year High At The Pumps

Petrol and diesel costs have hit their highest levels since December 2014, with increased pump prices starting to affect spending levels, according to the AA.

Statistics showed that the average price for unleaded petrol passed the £1.20-per-litre barrier this week, while diesel was at £1.23.

Brent crude dropped in value from levels near $120 a barrel after the summer of 2014 – hit by fewer demand and increased supply.

It remains more than half the price it was at its 2014 peak, currently $55.

But price growth has since combined with the collapse in the value of the pound – of up to 20% against the dollar since the Brexit vote – to inflict further pain on drivers because oil is priced in dollars.

There are warnings family budgets are being squeezed as the cost of living continues to rise because of sterling’s weakness, which has made imported goods and services more expensive.

The Bank of England has predicted inflation will near 3% by the year’s end – ahead of current wage growth.

AA president Edmund King said of the fuel figures: “Among AA members, 28% of them spend a set amount on fuel when they go to the fuel station, rising to 40% among the less well-off.

“Higher prices mean less mileage from what they budgeted, and the need to cut back on other spending to compensate to stay on the road.”

RAC fuel spokesman Simon Williams said: “Looking back to December 2014, it was a very different, much brighter
picture, as the oil price was consistently falling, going from $70 to $55 in the month and the exchange rate was $1.55.

“Today, however, oil has risen to $55 a barrel and the pound is worth just $1.25, which means with fuel traded in dollars, the cost of filling up has once again become a far greater financial burden to drivers.”