Fuel prices heading for £2 per litre as costs rocket by 10p in May

A litre of unleaded rose from 162.87p at the start of May to 174.02p by the close. This was less than a penny short of the all-time biggest rise recorded in March when a litre of petrol jumped by 11.61p (151.67p to 163.28p).

The major difference with the May rise, however, is that this happened after the historic 5p-a-litre duty cut invoked by Chancellor Rishi Sunak on 23 March and, of course, despite this, the cost of a litre has rocketed to yet another record high.

May also saw average diesel prices climb to new heights with a litre going up to 183p, a hike of more than 5p which takes the cost of a complete tank above £100 for the first time ever. A full tank of petrol also hit the landmark cost of £95.

The punitive pump price hike has been driven by oil rising from $106.07 to a late month high of $124.45 (31 May) – a 17% increase, combined with a weaker pound at $1.2 – an important factor as fuel, like oil, is traded in dollars on the wholesale market which can dramatically affect the price retailers pay to buy it.

The average price of a litre of unleaded across the big four supermarkets, which dominate UK fuel retailing, went up nearly 9p from 160.31p at the beginning of May to 169.05p by the end. Diesel increased from 174.18p to 180.38p – a jump of 6p a litre.

On the motorway a litre of petrol closed May at 187.66p, up by nearly 5.5p from 182.19p at the start. Diesel finished the month at 197.71p, up from 192.5p, with the prospect of hitting £2 a litre very real in the near future.

In terms of where prices might head next, the RAC expects average petrol prices to hit 185p as a result of the rising cost of oil, with diesel heading towards the 190p mark.

RAC fuel spokesman Simon Williams said:

“May has proved to be another horrible month for drivers with the average price of petrol shooting up by 11p a litre. This is the second biggest monthly increase on record and comes despite the 5p-a-litre cut in duty.

“Since Russia invaded Ukraine on 24 February the price petrol has gone up 24p a litre, For diesel the figure is 30p. This means the cost of filling a 55-litre petrol car has gone up by £13, and a diesel one by £16.50. Both of these figures would have been even higher had the Government not cut fuel duty.

“While it’s hard to imagine prices getting much worse, the wholesale price of petrol has now gone above diesel which spells yet more bad news at the pumps in the coming weeks.

“With drivers facing such a dire situation on the forecourts we badly need further intervention from the Chancellor as households and businesses surely can’t take much more financial pain in conjunction with the horrendous hikes in gas and electricity.

“Something needs to be done, whether that’s a further cut in duty from the current 53p charged on every litre bought at the pumps, or a reduction in VAT from 20%. Arguably, a duty cut would make a bigger difference to both businesses and individuals, but it also seems very unfair that the Treasury is benefitting to the tune of 30p a litre in VAT revenue from the record high prices – as it’s effectively a tax on a tax, applied on top of the wholesale fuel cost, duty, delivery and retailer margin. the challenges drivers are facing, a VAT cut would be instant and wouldn’t be swallowed up by fluctuations on the wholesale market.”

Read our ultimate guide to saving fuel and 30 money saving tips for drivers.