Retailers could be overcharging drivers 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 the year-on-year drop in prices at the petrol pump, profit margins made by retailers have increased over the past year.
He said this could not be explained by operating cost pressures, as supermarkets and other fuel retailers claim, and notes that competition in the sector is “weak”, meaning prices at the pump are not falling as much as they could.
The Government is pressing ahead with the launch of its new “fuel finder” in 2026, which will allow 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 worked well, drivers could see lower prices at the pump.
“We know that fuel costs are a big issue for drivers, especially at this time of year when millions of people are traveling across the country.
“That's why the fuel tracking system is crucial – it will put energy back into the hands of motorists and save households money.”
The CMA said prices have fallen at the pump due to falling wholesale costs, with the average price of petrol at 135 pence a liter between November 2024 and October 2025, down from 143 pence a liter in the same period last year.
The average price of diesel was 142 pence per liter between November 2024 and October 2025, up from 150 pence per liter the previous year.
But the profits retailers make on fuel sales are rising and remain at historically high levels.
The CMA first warned about this in early 2025, but said in its latest report that it does not believe operating costs are the reason retailers are increasing profit margins and that competition has not strengthened since its last market study in 2023.
Motoring group the AA said the CMA's findings show drivers are being “misled” and retailers are quick to pass on increases in wholesale costs but slow to respond to falls.
The AA said that while wholesale costs have fallen more than 7p a liter since the third week of November, the average price of petrol at the pump has fallen by just two-thirds of a cent.
An AA spokesperson said: “This is classic 'argument and pen' pricing at the pump and the bane of UK drivers.
“This time it comes as millions of drivers hit the road at Christmas and are being overcharged for fuel.”
RAC head of policy Simon Williams added: “Sadly, many drivers will not be surprised to learn that they are still paying too much for fuel, especially judging by the complaints we receive about large variations in prices from area to area.
“The fuel retailers trade association has claimed that rising operating costs were the reason why average petrol and diesel margins were higher, but this has now been clearly rejected by the Competition and Markets Authority, which says this does not explain why fuel margins remain high compared to historical levels.
“We sincerely hope that the new fuel search scheme, combined with the CMA’s continued scrutiny, will ultimately lead to greater competition and lower prices at forecourts for drivers across the country.”
