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The supermarket chain Morrisons was the first the cut diesel prices to below £1 a litre on Sunday and the other three big supermarkets also dropped prices on Monday.

Petrol, which is usually cheaper than diesel, was reduced below £1 a litre in the weeks before Christmas and these cuts show the further falls in the price of oil. Asda currently has 277 filling stations and said that it was the first supermarket to cut the price of petrol to below £1 a litre in November. Morrisons also stated this.

The price of oil is at its lowest for 11 years and Morrisons’ cuts were its cheapest since 2009. UK Brent crude oil is trading at just below $38, which is £26 per barrel. This means it lost 35% over the year.

About 75% of the price of UK fuel goes to the Treasury in duty and VAT and the remainder goes on refinery costs, distribution and the fuel retailers’ profit margins.

According to the motorists’ organisation, the forecourt price should have been cut earlier seeing as the wholesale price of diesel has been 2p lower than the wholesale price of petrol. This started a couple of weeks before Christmas and the organisation stated that more miles were driven in the UK on diesel than petrol.

Sainsbury’s is charging slightly more at 99.9p per litre whereas Morrisons, Asda and Tesco are charging 99.7p.

Negative inflation has turned positive this month because transport costs have helped the UK inflation rate to increase. Inflation stood at -0.1% in April but recently rose to 0.1% in May, as measured by the Consumer Prices Index (CPI).

The Office for National Statistics (ONS) reported that transport, in particular air fares, are the biggest contribution to the rise. However, although this was the main factor, other reasons are taken into account such as the rise in food and petrol prices during May. Despite these rises, the prices were still lower than a year ago.

When CPI turned negative in April, this was the first time it had done so since 1960. The food and fuel prices have had an effect on the rise in inflation and pulled down the rate by about 0.5 percentage, however this was less pronounced than the month before because the prices then had a negative effect of 0.7 percentage points.

Mark Carney, who is the Bank of England governor, said that he expects UK inflation to continue to be low in the short term. The Bank also expects near-zero inflation, which will help the UK economy by improving the spending power of households.

Danny Alexander the chief secretary to the Treasury has said that he will demand an assurance from fuel suppliers and distributors that they are doing all they can to cut prices further after recent declines in the cost of oil.

This week Brent Crude has slumped as low as $82 (£51) per barrel which is its lowest level in just over four years due to concerns about over supply.motorway-at-night

Petrol in the UK has fallen from 131.7 pence per litre to 124.22 pence which sees a decline of about 6%. For diesel the drop is from 136.37 pence per litre to 1.28.58 pence.

This news has seen the start of the supermarket price war and we are starting to see this locally. The cheapest fuel that we found locally so far is Asda in St. Leonards, they are as of 17.11.2014 selling at 118.7 pence per litre and diesel is currently at 123.7 pence per litre this has also seen Tesco’s and Sainsbury’s following suit with 1p cuts of their own.

The declining price of fuel can only be a good thing for the local economy. The knock on effect that fuel costs have on every aspect of the economy from the distribution of pretty much everything from food to consumer and business products should start coming down in price as the cost of transporting them goes down.

It will also naturally benefit everyone’s customers as they will have more disposable income which could translate into more spending.