Diesel prices hit record high Business

Diesel prices have hit a new record high as the Chancellor’s 5p fuel tax cut fails to prevent carnage in global markets from hitting drivers in the pocket.

The price per liter jumped to 180.29p over the weekend, according to the RAC, which warned the cost of filling the tank is likely to rise further.

That means a motorist filling up with 55 liters can expect to pay just over £99 at the pump.

Petrol currently costs 166.65 a litre, up 3% this month and close to its all-time high of 167.3p from late March.

RAC’s Simon Williams said the continued rise in diesel is partly due to Russia’s prominence in the fuel supply chain.

“Unfortunately, despite the Chancellor’s 5p per liter tariff reduction, the average price of a liter of diesel has reached a new record high of 180.29p. Efforts to move away from importing Russian diesel have led to tighter supply and pushed up the price paid by retailers for diesel.While the wholesale price has fallen in recent days, this is likely to be temporary, especially if the EU agrees to ban imports of Russian oil,” he said.

“Unfortunately, drivers of diesel vehicles have to be prepared for even more pain at the pump. If Mr Sunak had reduced VAT to 15% as we are asking him to do instead of reducing duty by 5p, drivers of Diesel vehicles would be better off by around 2p per liter or £1 for each full tank As things stand drivers still pay 27p VAT on petrol and 29p on diesel which is exactly the same as before the spring declaration.

At the time of the tax cut, Rishi Sunak called it “the biggest reduction of any fuel tax rate – ever”.

Petrol accounts for nearly 2% of the basket of goods used by the Office for National Statistics to calculate inflation, with diesel accounting for a further 1.1%.

This means that large swings in these prices add significantly to the official cost of living index, which hit 7% in March and is expected to rise more than 9% in April when the figures are released on Wednesday.

This is well above the Bank of England’s 2% target, increasing pressure on the Bank to do more to tackle runaway price rises – despite the difficulty of influencing fuel costs which are largely determined by world markets.