The AA has warned that fuel retailers are facing difficult conditions with falling consumption compounded by the recent exceptionally bad weather.

In its latest monthly fuel update it said petrol forecourt prices remain at a three-year low, averaging 129.46ppl in mid March compared with 129.63ppl last month. A year ago petrol averaged 138.42ppl.

Diesel prices are at their lowest since July 2012, averaging 136.59ppl in mid March compared with 137.02ppl last month – with wholesale price reductions pointing to a further 1ppl to 2ppl fall shortly. A year ago diesel averaged 145.24p a litre.

It also reported that the petrol price gap between smaller rural/coastal towns and larger towns with retailers remained in the 2p to 3p range, compared with 4p to 6p last year.

However, the reported said the encouraging outlook at the fuel pump had been tempered by an ONS report at the end of February highlighting the fall in the value of earnings. It said that because inflation had run ahead of earnings between 2009 and 2013, by April 2013 weekly earnings were similar to the level seen in 2002 when adjusted for inflation.

It added: “The impact of this was already being reflected in an AA-Populus survey at the turn of the year. Despite a 7ppl fall in the price of petrol between mid September and mid December, the cost of fuel was still forcing 60% of AA members to cut back on car use, other spending to compensate, or both. That rose to 70% among lower-skilled manual and service workers and pensioners.

“Supermarket sales figures released this week show that fuel continues to sap performance further while ONS retail sales statistics, released in late February, showed that fuel stores were the only sector to suffer a decline in January sales – despite the biggest fall in average store price.

AA president Edmund King said: “Appalling weather up until 10 days ago will have reduced car use and fuel consumption. However, official figures on inflation-hit earnings reveal a more persistent dark cloud hanging over the ability of UK drivers to use their cars. This is clearly making business difficult for fuel retailers too.”

Across the UK, Yorkshire and Humberside remains the cheapest area for petrol averaging 129.1ppl. Northern Ireland was still the most expensive, but its average has followed the rest of the country by falling below 130ppl.

At 136.3ppl, London shares its position as cheapest area for diesel with the West Midlands, while Scotland is most expensive at 137.3ppl.

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