Refill Fuel Tanks by Friday Amid Five-Year Forecast Warning

The recent analysis by the RAC reveals that UK petrol prices have reached their lowest levels since July 2021. As of January 2026, the average price per litre is 131.91p, marking a notable decrease of over 5p since early December. This price drop translates to nearly £3 savings for drivers refueling a typical 55-litre family vehicle.

Current Fuel Prices

Diesel has also seen a reduction, now priced at 140.97p per litre, down 3p since the beginning of January. The decline in fuel prices is primarily attributed to a fall in oil prices, which dipped below $60 per barrel on January 7, 2026, the lowest since February 2021.

Industry Insights

Simon Williams, head of policy at RAC, commented on the impacts of these price changes. He described the current petrol pricing as an encouraging development for drivers, resetting to rates last witnessed over four years ago. Furthermore, he noted that if retailers had passed on more of their cost reductions from wholesale market purchases, January’s price drops could have been greater.

Market Dynamics

A report from the Competition and Markets Authority (CMA), published in December, highlighted that profit margins for fuel retailers have increased over the past year. The CMA indicated that these rising margins could not solely be justified by claims of operating cost pressures from supermarkets and fuel retailers. The findings raised concerns regarding weak competition in the fuel sector.

Conclusion

As the fuel industry navigates these fluctuations, drivers can anticipate potential further changes in pricing. Staying informed about market conditions will be essential for budgeting fuel expenses in the year ahead.