Fuel retailers are being investigated by the Competition and Markets Authority (CMA) to see why a 5p duty cut is not being seen at the pumps.

Fuel prices are soaring, and the average car now costs more than £100 to fill, despite the Government announcing a £5bn package to reduce costs, in March.

Business Secretary Kwasi Kwarteng has instructed the CMA to examine the fuel market and see whether the duty cut is being passed on to consumers.

In a letter to the CMA, Kwarteng said: “We have taken action to support motorists by cutting fuel duty for petrol and diesel in a £5 billion package. Despite this action, there remains widespread concern about the pace of the increase in prices at the forecourt and, that prices may not fall as much or as fast as they rise.”

The CMA will also look at price variations between filling stations.

Fuel price data from the RAC shows the average cost of a litre of unleaded petrol stands at 185.04p, while diesel costs 190.92p per litre.

When the 5p duty cut was announced, in the Spring Statement, driver were paying 167p per litre for petrol and nearly 179p for diesel.

RAC fuel spokesperson Simon Williams said: “Average fuel prices have shot up to new records yet again with petrol hitting 185.04p and diesel 190.92p. This is an increase of 2p a litre on both since Thursday and takes the cost of filling a 55-litre family car with petrol to £101.77 and has led to the first ever £105 fill-up for diesel. Incredibly, the Government is now raking around £46 in tax from every full tank.

“The speed and scale of the increase is staggering with unleaded going up 7p in a week and diesel by nearly 6p. This must surely put more pressure on the Government to take action to ensure drivers don’t endure a summer of discontent at the pumps.”

The Government is being urged by The AA and the RAC to cut VAT or fuel duty to tackle rising diesel and petrol prices, with new record highs being set on a daily basis.

Gordon Balmer, executive director of the Petrol Retailers Association, said: “The briefings provided by Government spokespeople to the media indicate that Ministers do not understand how fuel prices are set.   We have contacted the Secretary of State for BEIS on multiple occasions offering to meet and explain fuel pricing. However, we are yet to receive a response.

“By law the 5ppl fuel duty cut has to be passed on – and it has been.  Petrol retailers have been unfairly scapegoated for rises in the wholesale price of fuel over which they have no control.

“We welcome the Competition and Markets Authority investigation, as it will confirm not only that the 5ppl fuel duty cut has been passed on but that competition between forecourts remains vigorous and that our members are operating on razor thin margins.

“If the Government wants to ease the burden of pump prices on motorists, they should cut fuel duty by a much more substantial margin, just as many other governments of European countries have done.”