The latest road fuel monitoring report by the Competition and Markets Authority (CMA) exonerated fuel retailers from using the conflict in the Middle East to artificially increase diesel and petrol prices.
The report says that elevated wholesale costs are the reason why prices soared in March and April.
However, the CMA added that a lack of effective competition in the sector remained a concern.
A range of reasons were found for higher fuel prices, not only wholesale price increases. The volatility of wholesale prices, supply constraints and increases in demand were all cited as factors. Where some retailers’ margins had increased, this was partly due to following competitors’ price increases and setting prices to mitigate supply constraints and inventory pressures, alongside differences in their purchasing costs.
However, the CMA also noted that average fuel margins remained at historically high levels, with the average margin increasing slightly in April to 11.3p per litre, despite stabilising inventory levels and wholesale costs.
The CMA was concerned that weak competitive dynamics, which it discovered during a 2023 market study, was still a significant issue, with retailers looking to match local market pricing rather than setting actively competitive prices.
The CMA would be concerned if current high prices continued, and would monitor the situation closely.
Sarah Cardell, chief executive at the CMA, said: “We know prices at the pump are putting real pressure on drivers’ pockets. While our analysis shows the rise in wholesale prices is the main reason for higher fuel prices, we remain concerned about weak competition in the sector leaving drivers paying more.
“Retailers should be in no doubt that we are continuing to monitor prices and margins closely and expect any reductions in wholesale prices to be rapidly and fully passed on to drivers.”
