Fuel margins remain stubbornly high despite falling pump prices over the past year, with weak competition – rather than rising operating costs – keeping prices elevated for drivers, according to a new report from the Competition and Markets Authority (CMA).
In its first annual road fuel monitoring report under new statutory powers, the watchdog said average fuel margins across the sector remain well above historic levels, even though petrol and diesel prices have fallen. The findings cover developments in the road fuel market up to October 2025.
The CMA found that average fuel prices declined by 8ppl year-on-year, with petrol averaging 135ppl and diesel 142ppl between November 2024 and October 2025. The drop was driven by changes in crude oil prices, exchange rates and refining spreads. However, those savings have not been fully passed on to motorists.
According to the report, supermarket fuel margins have eased slightly, trending down from a peak of 10.9ppl in 2022 to 9.6ppl year-to-date in 2025 (January to September). In contrast, margins at non-supermarket fuel retailers have continued to rise, reaching 11.1ppl compared with 10.8ppl in the previous year.
The CMA said this divergence reinforces concerns about weak competition, particularly outside the supermarket sector. It also challenges claims from some retailers that higher operating costs are responsible for elevated margins. Analysis of data from 2020 to June 2025 shows operating profit margins for large fuel retailers are increasing, which would not be expected if costs were significantly squeezing profitability.
Retail spreads – the difference between pump prices and benchmark wholesale prices – also remain high by historical standards. Between November 2024 and October 2025, petrol and diesel spreads averaged 13.9ppl and 14.6ppl respectively. While lower than the previous 12-month period, they are still well above pre-pandemic averages of 6.5ppl for petrol and 8.6ppl for diesel recorded between 2015 and 2019.
Dan Turnbull, senior director of markets at the CMA, said “persistently high” margins show competition in the sector is not working effectively. “If it was working well, drivers could see lower prices at the pump,” he said, adding that fuel costs remain a major concern for households, particularly during peak travel periods.
The report again highlighted the importance of the forthcoming Fuel Finder scheme, which will allow drivers to compare real-time fuel prices via apps and price comparison websites. The CMA said greater transparency should encourage retailers to compete more actively for customers and help motorists find cheaper fuel.
The government has accepted the CMA’s recommendations and confirmed the Fuel Finder scheme will be operational from next year. The watchdog has enforcement powers under new regulations to ensure retailers submit pricing data, including the ability to issue fines.
However, the CMA, which recently published new guidance and provided an update on its approach to enforcement, said its initial approach will focus on supporting compliance rather than enforcement, with this stance expected to continue until at least May 2026.