RAC comments on pump prices being at two year high

The UK's highest inflation rates for two and a half years largely due to higher fuel prices:

RAC Fuel Watch spokesman Simon Williams said: “The price of petrol and diesel reached a two-year high at the beginning of February and has remained at this level with yesterday’s (Feb 14) average forecourt prices of £1.20 for unleaded and £1.22 for diesel - the highest price we have seen since December 2014.

“While the price of oil has gone up the weaker pound has been a major factor in the pump prices increasing as all fuel is traded in dollars, including fuel produced in the UK. As a net importer of fuel the UK is at the mercy of the international exchange rate. Since the June 2016 referendum we have seen approximately eight pence per litre added to fuel prices of which over four pence can be attributed to the impact of the collapse in the pound against the dollar. This combined with a steady increase in the price of oil is a double whammy for drivers pushing up UK pump prices.

“The OPEC oil producing countries have remained bullish about their commitment to production cuts and their eagerness to stand by them. Compliance certainly seems to be holding and Saudi Arabia has described them as the deepest cuts in over eight years. This will maintain upward pressure on oil prices and we are unlikely to see any relief for six months or more as US shale oil producers gear up their own production.

“Motorists will fear any further statements which undermine confidence in the pound as this will have an immediate and decisive upward impact on fuel prices which represents a significant proportion of their household budgets.”