The UK's competition watchdog has issued a stark warning that motorists may be paying over the odds for fuel, citing 'persistently high' retailer profit margins and weak competition in the sector.
Watchdog Finds Margins Unexplained by Costs
In its first annual road fuel monitoring report, the Competition and Markets Authority (CMA) stated that profit margins for supermarkets and other fuel retailers have been rising over the past year. This is despite a year-on-year fall in the price drivers pay at the pump.
The CMA explicitly rejected claims from the industry that rising operating costs were to blame. Dan Turnbull, the CMA's senior director of markets, said: "Fuel margins remain at persistently high levels – and our new analysis shows operating costs do not explain this."
He added that this situation indicates competition is "weak", and that if it were functioning properly, drivers would see lower prices.
Prices Fall, But Not Enough
The report confirmed that average pump prices have decreased between November 2024 and October 2025, tracking a fall in wholesale costs. The average price of petrol dropped from 143p to 135p per litre, while diesel fell from 150p to 142p.
However, the watchdog found that retailer profits from fuel sales have increased during this period and remain at historically high levels. The CMA noted that competition has shown no improvement since its last major market study in 2023.
Industry Reaction and the 'Rocket and Feather'
Motoring groups reacted with frustration to the findings. The AA accused retailers of 'rocket and feather' pricing, where pump prices shoot up quickly when wholesale costs rise but fall slowly when they drop.
An AA spokesperson highlighted that since the third week of November, wholesale costs had fallen by more than 7p a litre, yet the average pump price had reduced by less than a penny. "This is classic 'rocket and feather' pricing at the pumps and the bane of UK drivers," they said.
Simon Williams of the RAC said many drivers would not be surprised to hear they are still paying too much, especially given large regional price variations.
New Fuel Finder Scheme on the Horizon
In response to these market concerns, the government is pressing ahead with its new national 'fuel finder' scheme, set to launch in 2026. This service will allow drivers to compare real-time fuel prices locally.
The CMA warned it would take action against any retailers that fail to provide the required pricing data for the scheme. Mr Turnbull emphasised the tool's importance: "We know fuel costs are a big issue for drivers... This is why the fuel finder scheme is crucial – it will put power back in the hands of motorists and save households money."
The RAC expressed hope that the combination of the new price comparison tool and ongoing CMA scrutiny would finally lead to greater competition and fairer forecourt prices across the country.
