Fuel prices dropped by 9p per litre, on average, in December, but should have fallen further, according to the RAC.

It believes petrol is currently over-priced by around 11p a litre and diesel by 14p a litre.

RAC Fuel Watch data shows petrol fell by 8.4p last month to 151.06p making a full 55-litre tank for a family car £4.63 cheaper (£83.08). Diesel came down by 9.4p to 173.97p meaning a complete fill-up was £5.19 less than it was at the start of the month at £95.68.

Wholesale prices, which have fallen considerably since mid-October, remained largely unchanged with petrol averaging 106p a litre throughout December while diesel was 123.4p. Based on these wholesale prices and allowing for a 10p-a-litre retailer margin – 3p more than the long-term average – the RAC believes petrol should be being sold around the UK for 140p – 11p less than the current UK average. For diesel drivers the figure should be nearer to 160p a litre – 14p lower than the average at the end of 2022.

RAC fuel spokesman Simon Williams said: “On the face of it, December looks like it was a good month for drivers with 9p coming off at the pumps on top of November’s 6p, but there’s no question that the drop should have been far bigger given how far wholesale prices have come down.

“For weeks we’ve been calling on the big four supermarkets to cut their prices more substantially to give drivers a fairer deal when they fill up, so even though they have reduced their prices collectively by more than 10p a litre in December, they are still nowhere near where they should be given the scale of the drop in wholesale prices. We hope the Business Secretary’s intervention just before Christmas puts more pressure on larger retailers to do the right thing.

“Looking at prices in Northern Ireland is a good reference for what should be happening across the rest of the UK as petrol was 4.5p cheaper there than the UK average at the start of December but was nearly 7p lower at the end of the month at just 144.43p. For diesel the difference is even more pronounced as a litre was 7p cheaper at the beginning of December and 9.5p less by the close at 164.55p.

“If fuel can be sold this cheaply in Northern Ireland, then this must mean something is very wrong with fuel retailing in mainland UK.”

In Europe prices are also considerably cheaper, as the average price of a litre of unleaded is 144p and diesel 152p. In France, unleaded is an average of 146p and diesel 154p. When compared to the 27 EU countries, the UK currently has the second most expensive diesel and the sixth most expensive petrol.