The UK's competition watchdog has issued a stark warning that drivers are continuing to be overcharged for fuel, despite recent falls at the pump. A new report from the Competition and Markets Authority (CMA) concludes that retailer profit margins on petrol and diesel remain significantly higher than historic averages, challenging industry justifications.
Watchdog Rejects Retailer Claims on Costs
The CMA's analysis, covering the period up to September 2025, directly challenges claims from some fuel retailers that higher operating costs are to blame for increased margins. The regulator found that these costs do not explain why fuel margins remain high compared to historic levels.
In fact, the report states that operating profit margins for large fuel retailers are actually increasing. "Declining or flat operating profit margins would be expected if operating cost increases were impacting the profitability of retailers’ road fuel businesses," the CMA noted, indicating that costs are not eating into profits as claimed.
The Numbers Behind the Pump Price
The data reveals a clear picture of sustained high margins. The average retail spread – the difference between the pump price and the cost of fuel – was 13.9 pence per litre (ppl) for petrol and 14.6 ppl for diesel in the period studied.
While this is lower than the exceptionally high averages of the previous year, it remains far above the pre-pandemic benchmark. The CMA highlighted that the 2015 to 2019 averages were just 6.5 ppl for petrol and 8.6 ppl for diesel.
On a pence-per-litre basis, margins for both supermarket and non-supermarket retailers are historically elevated. However, trends are diverging:
- Supermarket ppl margins have trended downwards from a 2022 high of 10.9ppl to 9.6ppl for the year to date in 2025.
- Non-supermarket retailer margins are broadly increasing, reaching 11.1ppl for 2025 year to date, up from an average of 10.8ppl in 2024.
The CMA also noted that average fuel margins on a percentage basis have continued to rise for both types of retailer.
Industry Reaction and Hopes for Change
Motoring groups expressed little surprise at the findings but emphasised the ongoing burden on drivers. Simon Williams, head of policy at the RAC, said: "Sadly, many drivers won’t be surprised to hear that they’re still paying too much for their fuel, especially judging by the complaints we receive about large price variations from area to area."
He welcomed the CMA's clear rejection of the retailers' cost argument and pointed to potential solutions. "We sincerely hope the new fuel finder scheme, combined with ongoing scrutiny from the CMA, finally leads to increased competition and lower forecourt prices for drivers right across the country," Williams added.
The report, published on 22 December 2025, underscores the regulator's ongoing focus on the road fuel market. It signals that pressure on retailers to ensure fair pricing and pass on wholesale cost savings more quickly is unlikely to abate in the near future.
