Petrol prices set for new high by end of the year
Petrol prices could rise as high as £1.26 a litre by the New Year, with the increase set to start with a three percent hike by the August Bank Holiday.
The RMI Independent Petrol Retailers Association has predicted the sharp rises thanks to a rebound in the price of crude oil and the relative strength of the dollar against the pound.
Crude oil prices have been hovering around the $72 a barrel mark, but have risen sharply in the last couple of weeks to a new high of $82 a barrel.
The pound has also performed weakly against the dollar for the first time in several weeks, leading to suggestions that pump prices will rise from their current average of 116.7pence per litre for petrol and 119.2ppl for diesel to around 125.9ppl by the New Year.
This would beat the previous average high of 121.6ppl once VAT and the double rise in fuel Duty are taken into account.
"This crude oil increase will feed through the supply chain and could result in prices going up by as much as 4.00ppl in the next three weeks," said Brian Madderson, chairman of the RMI.
"We also need to remember that the Coalition did not cancel the Labour Government's budget commitment to raising fuel duty by 1.00ppl from 1 October and a further 0.76ppl from 1 January – both to have 17.5% VAT added.
"Then we have the Coalition's emergency budget proposal to increase VAT to 20.0% from 4 January so the outlook remains extremely difficult for motorists and retailers alike."