UK Retailer Warns of Price Hikes as Diesel Surpasses £2 Per Litre

One of the UK's largest online retailers has warned that prices may need to rise if diesel costs continue their upward trajectory, after the fuel broke the £2-a-litre barrier. Mike Tomkins, owner of M and M Direct, stated that his company is finding it increasingly difficult to absorb rising shipping and freight expenses without passing them on to consumers.

Tomkins expressed concern about the current volatility in the market and potential fuel shortages, which he believes could impact the broader economy. He described the current business climate as the most unstable he has experienced in his 45-year career.

Motorists are facing record-high prices at the pump, with the average price of diesel now exceeding £2 per litre, according to the RAC. The cost to fill an average family car with diesel has increased by nearly a third, amounting to approximately £110, which is nearly £32 more than before the US-Iran conflict began.

Tomkins criticized the government, suggesting a need for a more business-friendly approach in the upcoming Budget. He called for potential reductions in VAT on fuel and urged the government to engage with business leaders. "You cannot keep the tax burden going the way it is. It is creeping up and up and in the end will really harm the country if we don't have a better tax regime," he told the BBC.

He revealed that up to a third of some of the business's orders are now subject to fuel surcharges, with M and M Direct already paying an additional £8,000 per day in fuel surcharges to transport providers. "This is real – we are not passing on yet but how long can businesses carry on without increasing shipping and freight costs to our end users to the customer?" he questioned.

The average price of diesel has reached 200.01 pence per litre, while petrol prices have also seen significant increases, averaging 174.71 pence per litre. The cost to fill a typical petrol car has risen to £96.09, an increase of £23.03 since February. The RAC warned that price rises are "showing no signs of slowing, heaping more misery onto motorists." Simon Williams, RAC policy head, described the current situation as "a price threshold no one wanted to cross," impacting commuters, haulage and delivery firms, businesses with large fleets, and sole traders.

In response to the rising costs, G7 nations have agreed to an emergency release of 100 million barrels of oil, though the impact is expected to take time. The record prices have been attributed to a combination of the Iran War and the ongoing conflict in Ukraine, compounded by China's restrictions on refined fuel exports.

UK farmers have also voiced concerns, as diesel is essential for tractors and transportation. Farmer Mark Means described the rising costs as "frightening to death" and felt like "an assault."

A government spokesperson stated that the UK has a "diverse and resilient supply" and that they continue to engage with international partners and the fuel industry to address the concerns.