LONDON (MNI) – Petrol prices, one of the factors behind the rise in
UK inflation, are set to head down, following the announcement Wednesday
that retailer Asda is cutting the price of unleaded fuel by 2 pence a
litre.
A spokesman for the Automobile Association said retailers “have
all been watching each other”, waiting for one to take the lead and cut
prices. The spokesman added that he was certain other retailers would
follow suit in locations where Asda has an outlet.
Asda, a WalMart subsidiary, has some 170 petrol retail sites around
the UK. It has kept its petrol prices below those of other retailers,
and its announcement may pave the way for petrol price deflation.
The AA’s latest petrol report said that average UK petrol prices,
having recently hit a record high of 121.6 pence per litre, had
been held steady by retailers despite a 2 pence decline in wholesale
prices in the past 10 days.
Asda has held its petrol prices well below the average, at around
117.9 per litre, and it has now announced it will cut them from Thursday
to 115.9 per litre.
The consumer price index is based on petrol prices throughout the
calendar month, so the full effect of a 2 pence per litre reduction,
assuming it sticks, will not come through until June.
Nevertheless, the Market News Petrol Price Index suggests such a
cut would, if it had been imposed throughout May, have knocked around
0.1 percentage points of the annual rate of change in CPI.
Headline CPI surged to 3.7% in April, well above the Bank of
England’s 2.0% target, although analysts believe this will be the peak.
—London Bureau; Tel: +44207 862 7491; email: drobinson@marketnews.com
[TOPICS: MABDS$,M$B$$$]
