Drivers hitting the road this Easter face 'concerning' hike in fuel prices as cost of petrol on forecourts rises by 5p per litre and diesel by 6p

Watchdogs have flagged 'concerning' increases in petrol prices and retailer margins as millions hit the road this Easter.

The Competition & Markets Authority (CMA) warned the figures suggest there is a lack of competition across petrol forecourts, including those run by the big supermarkets.

Motoring organisation RAC said the revelations confirm their fears that retailers are inflating prices of petrol unfairly.

Higher than justified petrol prices are a disaster for the finances of families and the wider economy because they push up transport costs.

As a result, efforts to bring inflation back down to the target of 2 per cent are made more difficult.

There are concerns that some retailers have taken advantage of the oil and energy price spike triggered by Russia's invasion of the Ukraine to boost their profits.

Senior Director of Markets at the CMA, Dan Turnbull, said: 'Drivers are feeling the pinch as fuel prices have been edging up since January.

'We're particularly concerned by high margins which indicate weakened competition and are not a good sign for drivers.'

Last year the CMA reported that retailers increased the margin between what they pay for petrol and what they sell it for by an average of 6p a litre during 2022. That effectively took £900million out of pockets.

The margin on diesel, which fuels the nation's HGVs, was 13p above historic averages.

The CMA said the latest price data reveals that the margins made by retailers remain at the high levels that sounded alarm bells last year.

The price of petrol rose by around 5 pence per litre (ppl) between January and February, taking it up to an average of 144.73 ppl. At the same time diesel has gone up 6ppl to an average of 154.53ppl.

The CMA said latest figures show the margin between what retailers are paying for fuel are way above the long term average of 5-10ppl. It said it is a much higher 15.2ppl on petrol and 15.15ppl on diesel.

It said: 'If average spreads remain elevated for an extended period of time, this could indicate a lack of retail competition in the sector.'

Last year, the CMA and the government announced they would monitor and publish monthly information on changes in fuel prices.

They also announced plans to set up a 'Pumpwatch' scheme to allow drivers to compare real-time fuel prices via navigation apps, in-car devices and comparison websites.

It is claimed that Pumpwatch will increase public information and encourage people to shop around so, in theory, leading to lower prices.

The CMA said: 'This sustained increase in the level of fuel margins is concerning and suggests that a key finding of the CMA's market study – that overall levels of competitive intensity have weakened in the road fuel retail market – remains valid.

'This emphasises the importance of the government pressing ahead with its plans to implement both recommendations from the CMA, for a statutory monitoring function and statutory fuel-finder scheme, as soon as possible, which will help drive greater competition in the market.'

Head of policy at the RAC, Simon Williams said: 'We have long flagged the problem of some retailers inflating their margins on fuel, which has been to the severe detriment of drivers who are already having to cope with wider spiralling motoring-related costs.

'It's extremely encouraging to see the CMA keeping a close eye on this as it should make retailers think twice about upping their margins.'

The Petrol Retailers Association (PRA) stresses that the margin between what retailers pay for fuel and what they sell it at to drivers is not all profit.

Executive Director of the Petrol Retailers Association, Gordon Balmer, blamed rising costs, outside the price of fuel, for driving up prices.

‘Fuel retailers operate on razor thin margins in a highly competitive market and must keep prices at the pump as low as possible to attract customers and avoid losing them to competitors,’ he said.

The organisation said its members have been contending with enormous increases in their operating costs, including energy, staff wages, business rates and the impact of shoplifting and fuel theft.

Two of Britain’s largest supermarkets, Asda and Morrisons, which have traditionally been at the forefront of fuel price cuts to lure in shoppers, have also been weighed down by huge debt piles of billions of pounds following takeovers.