Motorists petrol pump woes got even worse in May, according to latest figures from the RAC.
Moneywise reported mid-May that fuel prices were sky-rocketing across the country already, and the figures confirm that it has gone even worse.
The RAC says that unleaded petrol has shot from 123.43p, on average, to 129.41p. This is an increase of £3.29 on the cost of filling an average fuel tank, which now costs £71.18.
Diesel, meanwhile, has increased by even more from 126.27p to 132.39p – the second biggest rise in 18 years. The cost of filling an average tank of diesel has risen by £3.37 to £72.81.
Recent declines in the value of the pound against the dollar and price hikes from fuel-producing OPEC nations are considered the main reasons behind these latest price hikes.
Simon Williams, RAC’s fuel spokesperson, comments: “May was a hellish month for motorists. Sadly, they have been besieged by pump price rises for three months with nearly 9p a litre being added to petrol since the beginning of March.
“The rising oil price together with a weaker pound is a punitive combination for anyone who drives regularly. For many people, there is little alternative to the car for the majority of journeys they have to make so it is, therefore, very difficult to avoid feeling the pinch of rising pump prices.”
Bank of England to ‘wait and see’ on interest rates
In May, the Bank of England Monetary Policy Committee (MPC) backed down on a predicted rate rise due to better than expected inflation figures. However, soaring oil prices could increase inflation once again, so this raises questions for the Bank’s decision-makers.
Maike Currie, investment director for Fidelity International, explains: “While last month’s CPI [consumer price index] reading showed that inflation fell to 2.4% in April, the recent rally in the price of crude oil has led to a jump in prices at the petrol pumps. In April, petrol prices grew by 3p, according to the RAC – marking the worst monthly fuel price rise since December 2016. The trend is expected to continue as higher oil prices hit consumers hard.
“The rise in the oil price could very well feed through to inflation and act as a drag on growth. This will present a headache for the Bank of England’s MPC who will need to balance the problem of rising inflation, usually a signal for a rate hike, with the need not to stifle economic growth by putting more pressure on consumers through rising interest rates.
“With this in mind, the Old Lady of Threadneedle Street is likely to remain in ‘wait and see’ mode. If lower rates for longer remains the status quo, investors will need to look to the stock market for any chance of generating an inflation-beating return.”