Page last updated at 09:06 GMT, Friday, 24 October 2008 10:06 UK

Supermarkets slash petrol prices

petrol pump
The fresh round of cuts means a new price war between the supermarkets

A price war between the UK's top four supermarkets is under way after Asda, Sainsbury's, Tesco and Morrisons announced cheaper petrol.

Asda and Sainsbury's said they would slash their petrol prices to as low as 94.9p a litre.

Tesco and Morrisons also said they would reduce their prices, while petrol company Total will follow suit.

The supermarkets have already joined battle on the issue of forecourt prices on several occasions.

'Rip off'

Sainsbury will cut its petrol prices by 3p per litre. While its prices are locally set, it did say the majority of customers would pay 94.9p for unleaded and 106.9p for diesel.

No Sainsbury customers would pay more than 96.9p for unleaded and 107.9p for diesel, it said.

Sainsbury is supporting its announcement with a promotion offering an extra 5p off if customers spend 50 in store.

This could mean customers spend less than 90p a litre on fuel for the first time since April 2007, said the supermarket chain.

Meanwhile, Asda has said it will freeze prices in all of its 172 forecourts for 10 days, whatever the fluctuations in crude oil prices.

A litre of its petrol will now cost 94.9p, while its diesel will be 107.9p.

"It's simply not acceptable for anyone to be paying more than 1 for a litre of petrol, no matter where they live in the UK," said Asda trading director, Darren Blackhurst.

"If they are, they're being ripped off whilst petrol retailers pocket the profit," he said.

However some observers claimed that supermarkets could afford to sell petrol at a loss to try and win customers into their stores - a luxury which independent fuel retailers could not afford.

Price war

Several consumer groups welcomed the news, with AA president Edmund King saying the cuts had come at "just the right time".

Tesco, Britain's largest supermarket, said it would cut its fuel prices by 3p per litre at the majority of its 430 forecourts. This marks its third price cut in two weeks.

Morrisons' price cut will be its second this week. On Monday it trimmed 2p off a litre, taking its prices down to 97.9p for unleaded and 109.9p for diesel.

Supermarkets resumed their long-running price war earlier this month after the price of oil started heading downwards, putting pressure on them to react by cutting their own prices.

The price of oil has continued to slide, despite warnings by producers' cartel Opec that it could cut production rates to stabilise prices.

The RMI Petrol Retailers Association warned prices could rise in the near future, but said they would come down again.

"Consumers will see prices rise as we go towards Christmas, but they will actually drop further in January," said an RMI spokesman.

He said a January drop would be due to people traditionally driving less and demand subsequently falling.

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