Thursday, 23 February 2012

Supermarket fuel price war: the catch

There has been a wave of optimism as Morrisons announced a new deal for motorists. If you spend £60 in store between February 23rd and March 4th, you get a voucher offering 15p off a litre of petrol or diesel at its petrol pumps between March 4th and 11th. The company says it's a better deal than any of its supermarket rivals - including Tesco which is offering 10p a litre off fuel when you spend £60 in store.

The press has been awash with talk of a price war. But the experts say it's not something we should be getting overly excited about.

The deal
The 'Fuel Britannia' deal will certainly be a boon for those who qualify. Given that diesel prices have hit a new average high and that oil prices are at their highest since June last year, there's a sense that we need all the help we can get. If you spend £50 filing up the tank, there's every chance you can save well over £5 at the pump with the voucher.

Richard Lancaster, Morrisons Marketing Director, said: "We know how tough it is for our customers. This deal will help them in these tough economic times. Nobody has ever knocked this much off a litre of fuel before. This will make a real difference for our customers."

The catch

However, a spokesman for the AA says this deal will only be applicable to particular customers. He highlighted that the most recent figures from the Office for National Statistics show that only one group of shoppers spends more than £60 a week on a combination of food and alcohol - and that's families with two adults in the household.

Retired couples spend around £56 a week and those with two adults and no children spend £54.30. Although these are 2010 figures and inflation has taken effect, he highlights that only around 80% of this spend is typically with the supermarkets, so those without children are unlikely to qualify.

He says: "It's great for families, and the vouchers are very popular with them, but for a large section of the driving public unless they do a bulk-buy to last them two or three weeks, they are not going to see any benefit."

He also highlights that the underlying prices are continuing to rise, and that supermarkets are joining the rest of the industry in raising prices at the forecourt. It means that if you don't qualify for a voucher, life will continue to be punishingly expensive for the UK's drivers.

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