- Global oil prices eased in September, but supermarkets have failed to pass on the reduction to motorists.
- Instead, the retailers have raised their margins on petrol and diesel prices, according to motoring group RAC.
After hitting record highs in recent months, global oil prices have eased. This means that petrol and diesel prices can be expected to come down as well, providing the much-needed relief to motorists troubled by the high costs. However, UK supermarkets have been accused of not passing on the benefits to consumers.
According to motoring group RAC, the big four supermarkets did not pass on the fuel savings to drivers even though petrol witnessed a decline in September. The average price of petrol slipped by almost 7p per litre to 162.89p in September. The fall brought the cost of filling an average 55-litre petrol tank below £90. On average, drivers would have received a further 10p reduction in the prices.
However, the retailers instead decided to increase their margins and 'refused' to pass on the benefits to the drivers, RAC said.
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The RAC fuel data watch shows that the margins for big supermarkets are around 17p a litre, significantly higher than the normally 7p a litre. Moreover, the average petrol price at big supermarkets is just 1.5p lower than the country's average, less than half of the usual. RAC said the numbers indicate that the supermarkets are not playing fair with motorists.
In the past as well, the government has urged retailers to pass on the benefits to people. According to reports, the Competition and Markets Authority (CMA) is analysing the situation of fuel markets after petrol prices soared.
Let us now check out two FTSE forecourt operators and see how they have been performing.
Tesco Plc (LON: TSCO)
The supermarket chain owner also operates petrol forecourts. The FTSE 100 constituent has warned that its profits for the year will be at the lower end due to the soaring inflation. The company also added that it has raised its workers' pay for the third time in 13 months to help ease the cost of living crisis. Holding a market cap of £15,649.16 million, the company has a positive EPS of 0.19. In the last 52 weeks, its share price has tumbled by over 16%. The year-to-date return, too, is in the negative at -27.56%. As of 9:03 am, GMT+1 on 5 October, shares of TSCO traded at GBX 210.75, up 0.36%.
J Sainsbury Plc (LON: SBRY)
The country's second-largest supermarket chain enjoys a market cap of £4,234.60 million and a positive EPS of 0.30. The company was recently in talks with Property investor LXi REIT to sell its stores in southern England. However, LXi has now confirmed that it is pulling out of the deal. Sainsbury's shares have a negative 12-month return of -38.93%, and the year-to-date return is -34.95%. Shares of the company were trading at GBX 175.95, down 2.57% as of 9:12 am GMT+1 on 5 October.
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