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Drivers face surge in motoring cost

Wednesday January 6th 2010

Average petrol prices have risen above £5 a gallon for the first time in 15 months, the AA said today.

With VAT returning to 17.5%, the average price of petrol at the pumps has gone up to 110.04p a litre, with diesel now 111.77p a litre.

This compares with average petrol costs of 85.99p a litre a year ago, when diesel averaged 98.06p a litre.

AA public affairs head Paul Watters said: "The return to 17.5% VAT on January 1 wasn't evenly applied, with some supermarkets raising prices 2p a litre and others 3p depending on local competition.

"We were impressed that some independent petrol stations held their prices or undercut local supermarkets during the new year holiday."

He went on: "The fact that petrol sales by supermarkets were 1.8% down in the third quarter of 2009 compared to the same period in 2008 while other retailers boosted their sales 3.0% may indicate more selective buying by cash-strapped drivers.

"With further increases in tax due this year and the price of oil back above 80 dollars a barrel, the winter weather isn't the only problem sending a shiver through drivers.

"In November, 60% of AA members said they were cutting back family budgets, car use or both to compensate for higher fuel costs and we expect that to get worse. The Treasury has already predicted that fuel duty income will be £0.2 billion below budget this financial year. Retailers who look to take extra from the driver better beware of precipitating falling sales."

Copyright © Press Association 2010

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