Petrol prices set for record highs
Petrol prices are close to their all-time high and are set to reach record levels in the coming weeks. The average petrol price is currently 136.4p a litre, according to the AA - just 1p less than the May record of 137.43p.
"At the moment we are seeing the price of petrol going up by 0.5p each week - if this continues then we will can expect to see prices beat the record in a fortnight," says Luke Bosdet, spokesperson for the AA.
The cost of filling up a 50-litre tank is currently £68.20, compared to £58.43 a year ago when an average litre of petrol cost 116.87p.
Bosdet says that inevitably high petrol prices, combined with the effects of inflation, are forcing drivers to cut back on their car use: "So often we get emails in from drivers who've noticed prices going up every other day. This breeds anxiety and with finances already under strain drivers are more sensitive to it."
His comments are backed up by research from Sainsbury's Finance, which reveals that 76% of respondents to its survey claim to have changed their driving habits to save money.
It finds 26% of motorists no longer fully fill up their tanks while 45% drive less and another 7% have started car-sharing. Another 10% have even downgraded cars that are more economical to run. The Sainsbury's figures estimate that the average motorist now pays more than £1,700 in fuel bills over a year.
Separate findings from gocompare.com show that drivers mistrust fuel companies for continuously putting up prices, with 36% of those surveyed believing fuel companies use inflation as an excuse to inflate prices and 50% calling for the government to do more to control fuel costs.
Both Shell and BP have posted quarterly profits of £5 billion and £3.2 billion respectively. However, Bosdet, who specialises in fuel prices, says the future increases will depend on what happens in the US when its government finalises its new budget.
"The US dollar has lost its value and conversely the pound's strength allows it to buy up more wholesale oil. If the American government can sort out its budget we may not be able to buy up oil as cheaply.
"But it's something of a double-edged sword because if the US government doesn't come out with a strong budget the global economy - and therefore including oil prices - is likely to suffer in any case," he adds.
Bosdet is also critical of stockmarket speculators, who are "behaving extremely greedily" and contributing to volatile oil prices by predicting sudden price increases in order to make a profit.
Are you worried about soaring petrol costs? Read our guide to reduce your bill.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).