- Drivers paid 6p a litre more for fuel last year because of increased supermarket margins
- Decision to increase fuel margin targets at Asda and Morrisons followed change of ownership of both supermarkets
- Watchdog urges government to implement a mandatory ‘fuel finder’ scheme
Danni Hewson, head of financial analysis at AJ Bell, comments on the CMA's road fuel market study:
“At a time consumers and businesses were already struggling with rising prices supermarkets were adding to the burden by increasing their profit margins on fuel.
“Almost one billion pounds was syphoned out of motorists’ pockets in 2022 as a result of the change in practice which the competition watchdog says began with Asda and Morrisons, both of which had recently changed ownership.
“Prior to being taken into the hands of private equity both supermarkets had been aggressive in their pricing policy, with Asda in particular setting the bar which other supermarkets and retailers used for their own pricing decisions.
“Sainsbury’s and Tesco could have made a different choice and cut prices in line with falling wholesale costs, but they chose to maintain their previous position which helped the average annual fuel margin jump from 4.4% in 2019 to 7.6% in 2022.
“The findings will anger motorists who had spoken out repeatedly about the high prices they were being asked to pay at the pump and the rocket and feather approach which saw prices shoot up on an almost daily basis, but the reverse path seemed almost glacial by comparison.
“The watchdog has called for the government to create a new body to monitor prices going forward and to create a fuel finder scheme which requires companies to provide live data on fuel charges with the expectation motorists will vote with their steering wheels.
“As living standards have increasingly been eroded there has been heighted tensions about the prospect that some sectors had been profiteering, and business leaders will be paying close attention to moves by the regulator to clamp down on price increases that they deem to be unjustified.
“It’s a tricky line to walk. The UK needs robust businesses to keep employment levels up, to pay taxes and to drive the economy forward, but there is also a social responsibility to consider and ultimately it will be consumers who remember and respond.”
