Petrol price wars consigned to history as supermarkets say customer defection less likely

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Former Sainsbury’s chief executive Justin King said changing consumer attitudes partly spurred by the Covid-19 pandemic had left customers less likely to shop around for deals. He said the dip in competition had disincentivised supermarkets from offering lower prices on fuel in particular, as loyal customers were more likely to fill up at their usual shop.

Speaking on Andrew Neil’s ‘The Backstory’ podcast, Mr King said: “Historically fuel has been a go-to product for supermarkets to compete on price…because it was highly geared to changing where people shop because people would find where fuel was cheapest and then do their grocery shop there at the same time.

“I think one of the things that Covid has done is it’s changed a little bit people’s willingness to shop around. The data shows it very clearly.”

He added: “For whatever reason, it is the supermarket’s assessment at the moment that they cannot move that shopping basket around by lowering the price of fuel.”

It comes amid accusations that supermarkets are profiteering from rising fuel costs by failing to pass on savings to drivers despite buying fuel more cheaply than independent rivals.

Recent figures show soaring fuel sales have helped a number of major supermarkets bolster their finances in recent months, with some motoring bodies and independent petrol retailers accusing the giants of pushing up prices by taking advantage of the crisis.

Morrisons revealed this week that the company’s revenues were lifted by a 54 percent jump in fuel sales over the past three months due to soaring fuel prices.

Although the supermarket warned its total sales slumped over the past three months due to inflationary pressure and “increasingly subdued consumer confidence”, its sale of fuel saw a significant uptick.

The supermarket group, which saw a £7 billion takeover by private equity firm Clayton, Dubilier & Rice approved by regulators earlier this month, reported a 6.4 percent fall in group like-for-like sales excluding fuel and VAT for the 13 weeks to May 1.

Other retailers have also seen a jump in fuel sales, with Tesco registering a 44 percent increase in sales value to £2 billion in the first three months of the financial year.

The CEO of Tesco has denied the company is taking advantage of sky-high costs as petrol prices hit new highs despite easing wholesale costs.

Tesco is the UK’s largest petrol retailer, accounting for 16 percent of sales across the country.

The retailer has been accused of not passing on the 5p cut in fuel duty announced in Rishi Sunak’s spring statement in March to consumers.

READ MORE: Fuel duty tax cut wanted for millions by Boris – but Rishi won’t budge

However, Tesco’s CEO Ken Murphy has claimed the cut was passed on to customers immediately.

Mr Murphy stressed the supermarket should not be seen by customers as gaining from the recent increases.

He said: “I see no signs at this stage that there will be an easing of the pressure on fuel prices.

“When the Government passed through the fuel duty changes, we passed that onto customers the same day.

“There are no signs of relief in prices in the short-term. We lack visibility and so much of the pricing is still linked to the situation in Ukraine.”

Mr Murphy denied the company was profiteering from the fuel crisis.

He said: “I think we demonstrated clearly throughout the pandemic that we are on the side of the consumer…it’s a very emotive topic but our price position [on fuel] has not changed and won’t be changing.”

Asda has also hit back at the accusations and said it has passed on cuts on fuel duty to customers.

The cost of living crisis has been partly driven by sky-high fuel costs, with prices rocketing toward 200p per litre in the UK in recent weeks.

The average cost of filling a typical family car with petrol reached £109.42 this week as fuel prices reached record highs.

The price of unleaded petrol climbed to a whopping 191.05p a litre on Sunday while diesel hit new highs of 199.09p on Sunday, meaning a 55-litre family car would cost £109.42 to fill up.

Campaigners have argued the scale of the problem means that the Government’s cut was wiped out within days as prices continue to soar.

The RAC called the cut a “drop in the ocean” for cash-strapped drivers.


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