UK diesel prices drop sharply as Tesco, Asda, Morrisons and Sainsbury's react to watchdog criticism

The UK’s biggest supermarkets have dropped the price of diesel by more than 7p per litre in the wake of criticism from the competition watchdog. 

Major retailers, including Tesco, Asda, Sainsbury’s and Morrisons, have been enjoying profit margins of more than 20p per litre on diesel in recent weeks as the price at the pumps has failed to fall in line with wholesale drops. 

In May, the Competition and Markets Authority (CMA) said that it was concerned about a lack of competition on fuel prices and was particularly worried that weaker competition on diesel compared with petrol since the start of 2023 was keeping margins higher for longer than necessary. 

It highlighted the supermarkets in particular for growing their profit margins by an extra 5p per litre compared to their average pre-pandemic margins. And it said it would be calling in senior management from the chains to “get to the heart of the issues”. 

In the two weeks since the interim report, the supermarket big four - which dominate the fuel market in the UK - have dropped an average of 7.4p from a litre of diesel, bringing it down to 143.58p. 

Campaigners have been calling for a sharp drop in diesel prices for more than two months after its wholesale value fell below that of petrol but prices at the pumps stayed as much as 8p per litre more. The RAC said the recent cuts were a sign that the CMA’s comments had “jolted” the supermarkets into action but still didn’t represent a fair deal for motorists. 

The recent accelerated drop means diesel is now around 2.5p more expensive than petrol at a supermarket filling station and around 4p more expensive than petrol on average across all UK filling stations. However, diesel is 4p per litre cheaper than petrol on the wholesale market, meaning retailers are still pulling in far higher margins on it compared with petrol. 

RAC fuel spokesman Simon Williams said: “Since the Competition and Markets Authority made its announcement about supermarkets increasing their margins compared to three years ago and said they will be formally interviewing bosses, it appears the rate at which the price of diesel has fallen has sped up.

“Significant cuts to the price of supermarket diesel were long overdue as its wholesale price has been below petrol’s since the end of March. As a result average retailer margin on diesel had reached 22p a litre – more than three times the long-term average of 7p.

“Even today, with 27p having come off the average price of supermarket diesel since the start of the year, diesel drivers are continuing to get a poor deal. For two straight months it has cost retailers less to buy diesel on the wholesale market than it has petrol, yet they continue to charge more for diesel at the pumps. While wholesale price changes take some time to filter through to smaller forecourts which only buy new stock every few weeks, we can’t see any reason why the supermarkets still haven’t cut their prices to fairer levels as they buy much frequently.”

How do petrol prices compare?

Petrol prices have also fallen in the last two weeks but by just over 1p per litre. However, given the huge gap in prices over recent months, it is still on average cheaper than diesel, at 140.75p per litre at supermarkets. 

Williams added: “We look forward to the results of the CMA’s review within the next four weeks and hope it heralds an end to poor value at the pumps. We also hope it means the biggest retailers start charging fair prices at all of their sites across the country, and not just at those where they’re competing directly with other forecourts locally. It can’t be right that the same brand can sell fuel for so much more in one part of the country than another – this sort of postcode lottery is wholly unfair to drivers and completely unjustifiable.”