The CMA said in its first annual report on the fuel market that profit margins in the sector remain “persistently high” and cannot be explained by operating cost pressures
Retailers may be overcharging motorists at the pump, as the UK’s competition watchdog has found that profit margins in the sector continue to be “persistently high” and unexplained. In its inaugural annual road fuel monitoring report, the Competition and Markets Authority (CMA) discovered that despite a year-on-year decrease in petrol pump prices, retailers’ profit margins have been on the rise over the past year.
The CMA stated that this could not be justified by operating cost pressures, as claimed by supermarkets and other fuel retailers, indicating that competition in the sector is “weak” – which means pump prices are not reducing as much as they could. The Government is moving forward with the launch of its new “fuel finder” in 2026, enabling drivers to compare real-time fuel prices, and the CMA said it would take action against retailers that fail to provide data for the scheme.
Dan Turnbull, senior director of markets at the CMA, commented: “Fuel margins remain at persistently high levels – and our new analysis shows operating costs do not explain this.”
He added: “This indicates competition in the sector is weak – if it was working well, drivers could see lower prices at the pump.
“We know fuel costs are a big issue for drivers, especially at this time of year with millions making journeys across the country.
“This is why the fuel finder scheme is crucial – it will put power back in the hands of motorists and save households money.”
The Competition and Markets Authority (CMA) has reported a decrease in pump prices due to falling wholesale costs, with the average price of petrol dropping from 143p a litre to 135p a litre between November 2024 and October 2025. The average price of diesel also fell from 150p per litre to 142p per litre during the same period.
However, the CMA noted that retailers’ profits from fuel sales are on the rise and remain at historically high levels.
Despite issuing a warning about this earlier in 2025, the CMA stated in its latest report that it does not believe operating costs are the reason for the increase in profit margins. It also found that competition has not improved since its last market study in 2023.
Motoring group the AA has criticised these findings, suggesting that drivers are being “taken for a ride” as retailers are quick to pass on increases in wholesale costs but slow to respond when they fall. The AA pointed out that while wholesale costs have dropped by more than 7p a litre since the third week of November, the average price of petrol at the pump has only decreased by two-thirds of a penny.
An AA spokesperson commented: “This is classic ‘rocket and feather’ pricing at the pumps and the bane of UK drivers.
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“This time it comes as millions of drivers take to the road for Christmas and are being overcharged for their fuel.”
RAC head of policy Simon Williams said: “Sadly, many drivers won’t be surprised to hear that they’re still paying too much for their fuel, especially judging by the complaints we receive about large price variations from area to area.
“The fuel retailers trade association has claimed that rising operating costs were the reason for average margins on petrol and diesel being higher, but this has now been clearly rejected by the Competition and Markets Authority which says these don’t explain why fuel margins remain high compared to historic levels.
“We sincerely hope the new fuel finder scheme, combined with ongoing scrutiny from the CMA, finally leads to increased competition and lower forecourt prices for drivers right across the country.”
