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The UK competition watchdog found that profit margins in the sector remain “persistently high” and unclear, which could leave retailers charging motorists more at the pump.
In its first annual road fuel monitoring report, the Competition and Markets Authority (CMA) found that, despite a year-on-year decline in prices at the petrol pump, profit margins earned by retailers are increasing compared to the previous year.
It says this cannot be explained by operating cost pressures, as claimed by supermarkets and other fuel retailers, and signals that competition in the sector is “weak” – meaning pump prices are not falling as low as they could be.
Government It is pushing for the launch of its new “Fuel Finder” in 2026, allowing drivers to compare fuel prices in real time, and the CMA said it would take action against retailers who fail to provide data for the scheme.
Dan Turnbull, senior director of markets at CMA, said: “Fuel margins remain at persistently high levels – and our new analysis shows that operating costs do not explain this.
“This indicates that competition in the sector is weak – if it were working well, drivers could see lower prices at the pump.
“We know the cost of fuel is a big issue for drivers, especially at this time of year when millions of people travel across the country.
“That’s why the Fuel Finder scheme is important – it will put electricity back into the hands of motorists and save households money.”
The CMA said the price reduction was due to a decline in wholesale costs, with the average price of petrol set at 135p per liter between November 2024 and October 2025, down from 143p per liter in the same period last year.
The average price of diesel between November 2024 and October 2025 was 142p per litre, down from 150p per liter last year.
But retailers’ profits on fuel sales are rising and remain at historically high levels.
The CMA first warned about this in 2025, but said in its latest report that it does not believe operating costs are the cause of increases in retailers’ profit margins, and that competition has not strengthened since its latest market study in 2023.
motoring Group AA said the CMA’s findings show drivers are being “taken for a ride” and retailers are quick to absorb the rise in wholesale costs but slow to react to falls.
The AA said wholesale costs had fallen by more than 7p per liter since the third week of November, with the average price of petrol at the pump falling by just two-thirds of a pence.
An AA spokesperson said: “This is classic ‘rockets and wings’ pricing at the pumps and is the bane of UK drivers.
“This time it comes as millions of drivers are out on the road for Christmas and they are being charged more for fuel.”
RAC Head of policy Simon Williams said: “Sadly, many drivers will not be surprised to hear that they are still paying too much for their fuel, especially given the complaints we receive about large price differences from region to region.
“The Fuel Retailers Trade Association has claimed that rising operating costs were the reason for higher average margins on petrol and diesel, but this has now been clearly rejected by the Competition and Markets Authority, which says these do not explain why fuel margins remain higher than historical levels.
“We are fully hopeful that the new Fuel Finder scheme, coupled with the CMA’s ongoing investigation, will ultimately lead to increased competition and lower forecourt prices for drivers across the country.”