Supermarket price war puts petrol at four-year low

http://www.theguardian.com/business/2014/sep/30/supermarket-price-war-cuts-petrol-price

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Petrol prices are set to hit a near-four-year low after Tesco and Sainsbury’s announced they were cutting 5p off the price of a litre.

Both supermarkets reduced their prices on Tuesday. Asda said it would cut prices by 1p for unleaded petrol and 2p for diesel.

Petrol has become a new front in the war between Britain’s grocers. Tesco has been trying to lure back disaffected customers by offering savings on fuel based on their spending at its stores.

Peter Cattell, Tesco’s fuel director, said: “As Britain’s biggest fuel retailer this means more motorists can make real savings.”

The RAC said the pound had rallied against the US dollar since Scotland voted against independence, making petrol cheaper because it is priced in dollars. He said it was good news for motorists that supermarkets had passed the savings on.

“The wholesale price of both petrol and diesel has been low for around three months and as a result motorists have been enjoying some of the cheapest prices for over three years, but this cut will take us to a new low, the likes of which we haven’t seen since late 2010, early 2011.”

The RAC said the average pump price for a litre of unleaded petrol on Sunday was 129p. A 5p reduction on that figure, which may be higher than supermarkets charge, would take average prices to a low not seen since December 2010.

A prolonged period of low petrol prices could be good news for the chancellor by helping keep inflation in check and reducing costs for cash-strapped households and small businesses.

However, the Petrol Retailers Association, which represents independent filling stations, said supermarket price cuts would put further pressure on local forecourts that often provide an important service for rural communities. It said almost 900 independent operators had closed from 2008 to 2013, with more than a third in the countryside.