While the low price of oil is depressing prices at the pumps, changes in the value of sterling against the dollar could cause substantial prices increases, the PRA has warned.

Brian Madderson, chairman of the PRA, commented: “There has been and will be a huge volume of column inches rightly devoted by the media to the vital issue of forward oil pricing, but most forget the role of currency exchange on UK wholesale costs.

“Already sterling has weakened against the US$ from $1.55 down to $1.49 so holding back recent pump price reductions. Now some money analysts in the City are looking at further weakening in 2016 to as low as $1.27 or even $1.15.

“If the worst case occurs then an abrupt correction to pump prices, both diesel and petrol, would see rises by up to 8ppl very quickly – thus halting the downward price spiral unless the value of oil had collapsed simultaneously to below US$30 per barrel.

He also warned that any move by the chancellor to raise duty in the Budget on 16 March could also adversely impact pump pricing by another 2-3ppl from April.

He concluded: “Overall, the UK economy will continue to benefit from the collapse of global oil pricing which produced the peak of 142ppl for petrol in April 2012 - but will we enjoy sub £1 per litre motoring throughout 2016?”