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Drivers are still paying more for fuel, competition watchdog fears.

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High margins at fuel retailers could mean drivers pay even more at the pump, according to the competition regulator.

In a follow-up report, following its review of the 2022 fuel market, the Competition and Market Authority (CMA) said fuel margins – the difference between what retailers pay for their fuel and the price at which they sell it – remained “concerning”.

The watchdog previously found that motorists were overcharged by £900 million in 2022 due to the inability of supermarkets to pass on discounts linked to falling oil prices.

In its latest update covering the end of October last year until the end of February, the CMA noted changes in prices that reflected the price of crude oil.

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Prices have risen this year due to global factors, including conflict in the Middle East and, more recently, expectations of higher demand in China.

The regulator said supermarket margins, which stood at 4% in 2017, rose to 7.8% in 2023, from 7.6% the previous year – at the time of its initial investigation.

Other retailers, he said, saw margins rise to 9.1% last year, compared to 7.3% in 2022.

This is “not a good sign for drivers”, the CMA said, although it did not openly declare that they were being overcharged.

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Lobby groups representing both supermarkets and independent retailers, the British Retail Consortium (BRC) and the Petrol Retailers Association (PRA) respectively, have consistently denied defrauding drivers.

Supermarkets, which traditionally offer the cheapest fuel, were using petrol and diesel to attract shoppers to their stores.

But since the COVID pandemic, fuel margins have increased as grocery chains have invested in price cuts elsewhere as the rising costs of many grocery staples have skyrocketed.

For its part, the PRA pointed to data showing that petrol is cheaper in many of its members’ stores than in the supermarket, insisting that competition is strong.

She said in a statement: “PRA members have faced huge increases in their operating costs while providing motorists with the best possible deals.

“Costs in the form of energy, the national living wage and business rates have all risen sharply, not to mention record rates of shoplifting and fuel theft.”

The CMA said it remained convinced that overall competition had weakened in the road fuel retail market, despite the introduction of a voluntary price monitoring system to better inform drivers of local prices.

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Dan Turnbull, senior director of markets at the CMA, said: “Drivers are feeling the effects of the slight rise in fuel prices since January.

“We are particularly concerned about high margins which indicate weakened competition and are not a good sign for drivers.

“Today’s report reinforces the need Pump watch and statutory powers must be put in place as soon as possible, to ensure effective competition in this market and achieve better conditions for UK drivers.

RAC policy manager Simon Williams said: “We have long flagged the issue of some retailers inflating their margins on fuel, which has caused serious harm to drivers who are already facing a further spiral automobile-related costs.

“It is extremely encouraging to see the Competition and Markets Authority monitoring this situation closely, as it should make retailers think twice before increasing their margins.

“We recently provided our recommendations on what the fuel price monitoring feature should track to ensure drivers get the most out of every time they refuel. We now need to ensure that this unique opportunity to guarantee fuel prices more equitable fuel is not missed.”.

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