UK fuel prices rose again in January after falling in December, but the RAC says drivers are “finally getting a better deal” at the pumps. According to the motoring organisation, petrol stations’ profit margins are returning closer to “normal” levels as the cost of oil rockets.

At the beginning of January, the RAC said a barrel of oil cost $79, but that rose to $92 by the end of the month, pushing the cost of fuel up slightly. At the close of the month, the average litre of unleaded petrol cost 146.45p, while the average litre of diesel was sold for 149.81p – increases of less than a penny on the start of the month. That meant the cost of filling up a typical 55-litre fuel tank with petrol rose to £80.55, while doing the same with diesel would cost £82.40.

Despite this, the RAC says the average profit margin made by retailers on a litre of petrol fell from 16.4p in December to 11.4p in January – far closer to the long-term average profit of around 6p per litre. The average margin on a litre of diesel is now back to roughly normal levels of 8p per litre, down from 12p in December.

Esso petrol station and Tesco express convenience store in London

“At long last, retailers appear to have heard our clarion calls for drivers to be charged a fairer price at the pumps,” said RAC fuel spokesperson Simon Williams. “That is so important as the effect of high inflation bites and households up and down the country brace themselves for what looks like an inevitable cost of living squeeze. On average, retailers are now making a more normal profit for each litre of fuel they sell than they did in December which makes today’s pump prices – although up slightly on December – more justified.

“Storm clouds are gathering, however. With oil now having traded above $90 for a week – the highest price for more than seven years, wholesale fuel costs are once again increasing, which will undoubtedly lead to retailers putting up forecourt prices. Our message to the biggest retailers, which lead the market, is to treat drivers with respect by fairly reflecting the movement in the wholesale fuel market and not taking overly high margins.

“If they were to increase their margin and hike prices beyond what’s justified it would be devastating for hard-pressed drivers. We’ll be watching pump prices closely in the coming weeks to ensure drivers aren’t taken advantage of, so it’s safe to say the coming weeks will be a big test of pricing transparency for retailers.”