Fuel retailers ramping up profit margins amid ‘weak’ competition – CMA

Retailers could be overcharging motorists at the pump after the UK’s competition watchdog found profit margins in the sector remain “persistently high” and unexplained.

In its first annual road fuel monitoring report, the Competition and Markets Authority (CMA) found that, despite a year-on-year fall in prices at the petrol pump, the profit margins made by retailers have been rising over the past year.

It said this could not be explained by operating cost pressures, as claimed by supermarkets and other fuel retailers, and signals that competition in the sector is “weak” – which means pump prices are not coming down as much as they could.

The Government is pressing ahead with the launch of its new “fuel finder” in 2026, allowing drivers to compare real-time fuel prices, and the CMA said it would take action against retailers that fail to provide data for the scheme.

Dan Turnbull, senior director of markets at the CMA, said: “Fuel margins remain at persistently high levels – and our new analysis shows operating costs do not explain this.

“This indicates competition in the sector is weak – if it was working well, drivers could see lower prices at the pump.

“We know fuel costs are a big issue for drivers, especially at this time of year with millions making journeys across the country.

“This is why the fuel finder scheme is crucial – it will put power back in the hands of motorists and save households money.”

The CMA said prices have come down at the pump due to falling wholesale costs, with the average price of petrol at 135p a litre between November 2024 and October 2025, down from 143p a litre in the same period the previous year.

The average price of diesel was 142p per litre between November 2024 and October 2025, down from 150p per litre the previous year.

But the profits retailers are making on fuel sales are increasing and remain at historically high levels.

The CMA first warned over this earlier in 2025, but said in its latest report that it does not believe that operating costs are the reason for retailers increasing profit margins, and that competition has not strengthened since its latest market study in 2023.

Motoring group the AA said the CMA findings show drivers are being “taken for a ride” and retailers are quick to pass on rises in wholesale costs but slow to respond to falls.

The AA said while wholesale costs have fallen by more than 7p a litre since the third week of November, the average price of petrol at the pump has dropped by just two-thirds of a penny.

A spokesperson for the AA said: “This is classic ‘rocket and feather’ pricing at the pumps and the bane of UK drivers.

“This time it comes as millions of drivers take to the road for Christmas and are being overcharged for their fuel.”

RAC head of policy Simon Williams added: “Sadly, many drivers won’t be surprised to hear that they’re still paying too much for their fuel, especially judging by the complaints we receive about large price variations from area to area.

“The fuel retailers trade association has claimed that rising operating costs were the reason for average margins on petrol and diesel being higher, but this has now been clearly rejected by the Competition and Markets Authority which says these don’t explain why fuel margins remain high compared to historic levels.

“We sincerely hope the new fuel finder scheme, combined with ongoing scrutiny from the CMA, finally leads to increased competition and lower forecourt prices for drivers right across the country.”