UK Fuel Prices Hit Peak as Reeves Extends Duty Cut

UK petrol prices have reached their highest levels since the start of the war in Iran, with the average price of a litre rising to approximately 159.4p. This surge represents an increase of 26.6p since February 28, causing the average cost of filling a standard 55-litre tank to climb to £87.69.

Rachel Reeves, the Chancellor of the Exchequer, responded to these cost-of-living pressures by confirming that the government will extend a temporary 5p per litre fuel duty cut through the end of 2026. This decision overturns a previous expiration date set for September.

The RAC Foundation reports that since February 28, these price hikes have cost motorists an additional £500 million for petrol and £1.5 billion for diesel. Simultaneously, the Treasury has collected over £336 million in additional VAT. While diesel prices have dipped slightly from an April peak to around 184p, they remain significantly higher than pre-war levels.

The British Chambers of Commerce and the RAC Foundation warn that the conflict in the Persian Gulf is causing broader economic disruption. They note that higher energy bills and shipping delays are impacting firms across the UK, with economic reverberations expected to persist for several months.