Petrol and diesel prices rose by about 3p a litre in December taking them to their highest average prices since July 2015, according to the latest RAC Fuel Watch data.
Unleaded hit 117.23p a litre on 29 December, while diesel rose to 119.63p having been at 114.24p and 116.56p a litre respectively at the beginning of the month.
The RAC says that throughout December the average price of a litre of supermarket fuel increased more than it did among all retailers – 3.34p for petrol and 3.16p for diesel compared to 2.99p and 3.07p nationally.
The increased cost of fuel means filling up an average 55-litre family car with petrol rose by £1.60 from £62.83 to £64.48, and for diesel from £64.11 to £65.80.
The wholesale cost of both fuels rose nearly 4p a litre as a result of oil production cuts announced by the Organisation of the Petroleum Exporting Countries at the end of November.
This led to oil rising 11.75% from $49.09 on 30 November to $54.86 on 30 December, with the price going back up through the $50 a barrel mark for the first time since late October. The price of oil is more than double what it was in January 2016 when a low of $26 a barrel was recorded.
RAC fuel spokesman, Simon Williams, adds that prices are likely to rise further in the weeks ahead. He says: “We are optimistic that prices will not increase by another 3p a litre in January based on what’s going on with oil and wholesale fuel now, but if in the months ahead the barrel price was to get nearer to $60 and the pound was to weaken further then that would be the worst possible combination for motorists.
“Our current forecast for the next two weeks is for petrol to be around the 118p mark and for diesel to go up to around 121p a litre. We should also say that we need the pound not to lose any more value against the dollar as fuel, like oil, is traded in dollars.”
Prices up £8-£10 per tank over 2016
Over the course of 2016 unleaded went up 14.5p a litre from 102.99p at the beginning of January and diesel increased 13.64p from 105.99p a litre, although the diesel price went on to reach a low at the end of January of 101.05p, meaning motorists are now paying 18.5p more a litre now.
As a whole, it now costs £8 more for a tank of petrol than it did at the same time last year and £10 more for diesel based on the end of January low price of 101.05p a litre.
Regional fuel price variation
By the end of December Northern Ireland was the cheapest place to buy both petrol and diesel, with the average price of a litre of unleaded selling for 115.58p, and diesel at 117.88p. It also saw the smallest increase in both prices through the month at 1.9p a litre for unleaded and 2.71p for diesel.
The South East remained the most expensive region for both petrol and diesel, with the average litre of unleaded costing 117.84p, and diesel 120.28p, but Scotland saw the biggest jump in both the petrol and diesel prices at 3.75p a litre and 3.59p a litre, respectively.