Supermarket fuel profit margins double since start of Ukraine war

The four biggest UK supermarkets have doubled their profit margins on fuel since Russia invaded Ukraine in February 2022, analysis has revealed.

Research from the RAC of wholesale and retail prices showed Tesco, Asda, Sainsbury’s and Morrisons – supermarkets that dominate the UK fuel market – had increased their margins from 4.7p per litre prior to the war to around 10p per litre since.

The motor services company revealed an overwhelming profit margin on diesel currently at 15p per litre due to wholesale prices falling for the stores.

Meanwhile, margins on petrol reached almost 11p a litre in 2022 and has now dropped to 6p per litre.

Lower fuel costs helped inflation to drop from 8.7% in May to 7.9% in June, however RAC said the figure could have been even lower if pump price reductions were “in line with cheaper wholesale costs”.

In 2016, combined margins for petrol and diesel were just 2p, gradually rising to 6p in 2021, until the sharp spike in 2022 to 9p.

RAC fuel spokesman Simon Williams said the supermarkets had “benefited considerably” following fuel price fluctuations sparked by the Ukraine war.

Mr Williams added: “They appear to have capitalised on petrol in the early months of the war by upping their margin by 5p a litre in 2022, while they have increased their margin on diesel by nearly 8p this year to 15p by putting off reducing their prices when the wholesale price tumbled.

“Frighteningly, this is twice the average supermarket margin on diesel from 2019 to 2022.”

He accepted that running forecourt costs may have increased but criticised the margins as “bloated”, saying those affected were the “millions of drivers already battling the rising cost of living”.

The increased profit margins led to drivers paying an extra 6p per litre for fuel last year, an investigation by the Competition and Markets Authority (CMA) found.

Asda’s pence per litre fuel margin targets were three times higher this year than in 2019, the department added.

The store was also fined £60,000 for failing to provide information when required.

CMA director of markets Dan Turnbull told the Commons’ Business and Trade Committee on Wednesday that the retailer deliberately passed on reductions in wholesale costs more slowly in areas where it had no competition.

Asda said focusing on fuel prices didn’t complete the “full picture” of its profits, which last year were “down by more than 20% year-on-year”.

An Asda spokesperson said: “In support of calls for greater transparency in fuel pricing, we will be making our prices visible for all of our fuel stations in the coming weeks, so motorists can be confident they are getting the best prices when filling up.

“Asda’s profits last year were down by more than 20% year-on-year, resulting in a profit of 1.7p for every pound earned.

“This decrease is a direct result of absorbing inflation to keep grocery prices as low as possible while investing in new initiatives to help families during the cost of living crisis.”

Morrisons declined to comment, while Tesco and Sainbury’s have been contacted.

This article was originally published by Sky.com. Read the original article here.