UK petrol prices surged to a fresh record — amid the first clear signs that demand might be starting to slip because of the jump in fuel costs.
The average UK diesel price rose to an unprecedented 198 pence a litre on Wednesday, while petrol hit 189.84p, also a record, according to the RAC motoring organisation. Soaring fuel costs helped lift UK inflation to 9.1% in May, the highest in four decades.
But there are signs that motorists are starting to baulk at the high prices. Average sales of both fuels were down by about 3% week on week, according to government data. They were also noticeably down from a year ago — when some COVID-19 lockdown measures were still in place, potentially curbing demand.
The oil market is on high alert for demand destruction globally because of high prices. Fuel costs have rallied far more sharply than the cost of crude amid signs of a bottleneck in global oil refining capacity.
“It seems as though we are just days away from the frightening prospect of the price of diesel averaging £2 a litre across the UK, taking the cost of a full tank to a staggering £110 ($134.43),” said Simon Williams, fuel spokesman for the RAC.
The government fuel sales data represent sampled filling stations in Great Britain. They show diesel sales down by 6.8% in the seven days ended on 19th June relative to June 14-20 last year, when there were some limits on social contact. Petrol sales were down by 2.3% over the same period.
•By Bloomberg|Jack Wittels