The Petrol Retailers’ Association is urging the Chancellor of the Exchequer to reverse fuel duty and tax rises in the next Budget because otherwise soaring fuel prices will stifle the economy.

PRA chairman Brian Madderson said: “With pump prices set to continue rising, the Chancellor must take swift action in the Budget on 20th March to cancel the proposed duty rise in September and cut this damaging tax which restricts economic recovery and adds to inflation.”

In spite of UK refiners complaining of a production glut of petrol and demand being depressed by the wintry weather across most of the country, UK wholesale prices for road fuels have continued to climb with petrol up by more than 9.00ppl since Christmas and diesel up by over 7.00ppl.

Madderson continued: “Weakening exchange rates account for a part of the recent increases as does the rise in Brent Crude. However the majority of the wholesale cost increase is unexplainable.

“Why did the OFT carelessly conclude in its recent findings that ‘while these issues (impact of speculation and manipulation of oil spot and futures markets) could potentially raise serious concerns, we have not received any credible evidence to suggest such concerns are arising … and do not propose to carry out any further investigation’.”

He said the Government urgently needed to address this and other fuel market issues which the OFT failed to confront in its report last month.

He added: “The bad news for motorists and businesses is that pump prices will increase yet further with national averages of 140ppl for petrol and 147ppl for diesel now just around the corner. It will only take Sterling to weaken from its present level of £1.56 down to £1.50 against US$ (the petro-currency) and both fuel grades could soon hit new record highs eclipsing the 142.48ppl for petrol and 147.93ppl for diesel reached in April 2012.

With the Governor of the Bank of England Sir Mervyn King advocating depreciation of the pound to boost exports, UK motorists and businesses could be in for a very costly rise in fuel prices by the spring.

“This will continue to stifle the UK’s economic regeneration, is bad news for inflation and very bad news for households and small businesses reeling from recession.”