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Last Updated: Wednesday, 7 November 2007, 15:03 GMT
Average petrol cost at 1 a litre
Man filling up at petrol station
Petrol prices have risen on the back of higher global crude costs
The average UK price of unleaded petrol has passed 1 per litre for the first time, a research group has said.

A litre of unleaded petrol now costs 100.08p, according to the latest data from industry researchers Catalist.

Petrol prices have risen sharply on the back of record global oil prices, which have increased as a result of supply concerns and the weak dollar.

Duty on petrol and diesel was also increased by 2p a litre from the start of last month, further lifting prices.

The average price of a litre of diesel is now 103.32p. Diesel broke through the 1 level two and a half weeks ago.

This time last year one litre of unleaded petrol cost 86.11p.

Weak dollar

Petrol retailers have warned for some time of escalating prices as wholesale crude prices soar and the impact of rising fuel duty makes itself felt.

The weak dollar has driven up oil prices because some investors have been using the commodity as an alternative to holding dollars.

Petrol price break down

On the other hand, it makes oil relatively cheaper for anybody outside the US, as crude is priced in dollars.

Recent oil supply concerns have centred on a number of factors, including Iran's stand-off with the West over its nuclear ambitions, and a possible Turkish military action against Kurdish rebels across the border in Iraq.

"More and more retailers are accepting that they have to break through the psychological 1 per litre barrier," said AA head of road safety Andrew Howard.

"It is likely that with the average now through the barrier more [rises] will follow.

"This, coupled with steadily rising prices on the world oil markets, mean that relief for the British motorist is unlikely in the near future."

Passing on

The increasing price of petrol may be one factor being discussed by the Bank of England's Monetary Policy Committee, which on Thursday will announce its latest decision on UK interest rates.

Most analysts expect the Bank to keep rates on hold at 5.75% to guard against inflationary pressures caused by higher petrol prices.

While firms have so far absorbed most of the recent increases in petrol prices, if transport costs continue to grow companies may have to pass them on to consumers through higher prices.

Petrol price



SEE ALSO
Diesel costs more than 1 a litre
19 Oct 07 |  Business
Tax rise fuels petrol price fears
01 Oct 07 |  Business
UK fuel prices reach new record
27 Apr 06 |  Business

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