The cost of a litre of unleaded is now at its lowest point since the summer of 2021, according to the RAC.
The breakdown and insurance firm’s monthly fuel watch analysis holds that a litre of unleaded currently stands at 131.9p on average, down 3p since the start of January, and a price not seen since July five years ago.
The firm attributes this drop to oil “dipping below $60 a barrel” on January 7, again, a price not seen since 2021.
Diesel, meanwhile, also fell 3p in January, with a litre now being 140.97p on average, though it is over 6p more expensive than it was in 2021.
The RAC’s head of policy. Simon Williams, says that seeing unleaded fall to below 132p is “a genuine boost for drivers, rewinding prices to those we last saw four and half years ago”.
He notes, though, that the Competition and Markets Authority believes “retailer margins remained at historically high levels” in 2025, and that the CMA confirmed that “operating costs were not the reason for average margins on petrol and diesel being higher”, with this being “contrary to what the fuel retailers trade association had been arguing”.
The Petrol Retailers Association executive director Gordon Balmer maintains his position.
”The CMA’s conclusion in their most recent report published on December 22 is that the net profit on fuel at supermarkets is just over 6% and for non-supermarkets at just over 10%. However, for non-supermarkets this analysis is flawed as it includes non-fuel sales,” says Balmer.
He adds: ”Most of the pump price is government tax in the form of fuel duty at 52.95ppl, plus VAT at 20% which is levied on the fully built-up price, in effect a tax on a tax. This accounts for roughly 55% of the pump price of fuel in stark contrast to the 7% net margin made by forecourt operators.”
