Petrol prices to peak ahead of Easter
Petrol prices are set to peak at £1.20 a litre - ahead of the busy Easter bank holiday weekend.
Motoring organisation the AA warns the 17% rise in wholesale petrol prices seen in Europe since January is likely to spark a rise in forecourt prices across the UK. It forecasts the price of a tank of petrol could increase by £4 compared to late January/early February prices.
This means that a family with two petrol-run cars could see the monthly cost of fuel rise £16.99 above what it was earlier this year.
Drivers hoping to get away over the Easter break will bear the brunt of the spike in prices – but there is more misery to come. From 1 April, the government will add 3p in fuel duty and VAT on to the cost of petrol and diesel.
Average UK petrol and diesel prices hit a plateau of around 112p a litre for petrol and 114p a litre for diesel in February, when wholesale petrol prices were stable around $680 a tonne.
However, wholesale prices increased by nearly 17% last week to hit $795 – and as a result, on Sunday 14 March, average UK petrol prices rose to 115.93p a litre.
“The UK is barely out of recession yet petrol prices threaten to rise to record prices seen during the boom of 2008 – shortly before the collapse into recession,” says Edmund King, the AA’s president.
“If families, drivers on fixed incomes and those on low pay were unable to cope with record prices then, they are even less likely now.”
King calls on the government to investigate the reasons behind the spike in wholesale petrol prices.
And he adds: “The easiest and quickest stabiliser would be to freeze the fuel duty increase on 1 April.”
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.