Diesel Prices Nearing Record Highs Amid Middle East Tensions, Fueling Economic Concerns
The RAC warns diesel could reach an all-time record within a week, increasing pressure on households and businesses.
Diesel prices are on the verge of reaching an all-time record, with the RAC warning that the current rate of increase could see the previous peak surpassed within the next week. Drivers are currently paying only 5 pence per liter less than the record 199.05 pence per liter set in June 2022.
The surge in diesel prices, alongside a rise in petrol costs, has intensified pressure on households and businesses that rely on diesel-powered vehicles. The average price of unleaded petrol has reached 171.27 pence per liter, while diesel stands at 193.85 pence per liter, marking new highs attributed to the ongoing Middle East conflict.
RAC head of policy Simon Williams stated that both fuels have increased by 10 pence since the beginning of September. He highlighted the particular concern over diesel prices, noting their proximity to the 2022 record. "It's diesel prices that we're watching particularly closely – the average diesel price is now just 5p off 2022's all-time high of 199p, a watershed that looks increasingly likely to be breached within the next week if prices keep rising this quickly," Williams said.
Williams added that the escalating costs could have a detrimental effect on businesses, potentially leading to increased prices for consumers. "These increased costs could unfortunately be passed on to consumers in order to balance the books," he said.
The rising fuel costs come as official figures show a slight increase in the headline Consumer Price Index (CPI) inflation, reaching 3.1 percent in the year to August, up from 2.9 percent the previous month. Fuel prices are identified as a primary driver of this uptick.
Economists have cautioned that this inflation increase may be just the beginning, with oil costs remaining high. Brent Crude was trading at $108 a barrel. Some analysts predict CPI could reach 4 percent next year, prompting market expectations of multiple interest rate increases by the Bank of England to combat potential inflation spirals. The Bank of England's Monetary Policy Committee is expected to hold interest rates at 3.75 percent at its next meeting, despite the rising inflation figures.
Calls are mounting for Chancellor John Healey to implement measures in the upcoming Budget to alleviate costs for motorists. Suggestions include abandoning planned fuel duty increases, cutting fuel duty, or reducing VAT on fuel, with the RAC urging that no options should be off the table.