Petrol dropped by 12p per litre across the month - the largest single month reduction on record - and fell below 170p per litre for the first time since May.
However, the wholesale price fell even more sharply throughout August, leading to accusations that retailers are still passing on savings to motorists struggling with rising living costs.
According to the latest figures from the RAC, the average price of a litre of unleaded fell to 169.8p by the end of August. That means it is now £6.77 cheaper to fill an average family car than it was at the start of the month and brings the cost of a full fill-up back below £100.
But the RAC says that retailers have taken advantage of a continuing drop in wholesale petrol costs to extend their margins and the real cost of a litre should be closer to 161p. The cost for retailers is now at the same level as in April, when they were charging drivers 162p per litre.
A raw deal for drivers
RAC spokesperson Rod Dennis said: “Twelve pence a litre is a lot to come off prices in a single month so there’s no doubt things could be worse, but in reality drivers of petrol vehicles are still invariably getting a raw deal at the pumps. For whatever reason, major retailers are choosing not to pass on in full the reductions in the wholesale price of unleaded they’ve been benefiting from for some considerable time now – and this continues to mean drivers are often paying much more every time they fill up than they should.
“By the end of August wholesale prices were lower than they were at the start of the month, so even factoring in buying cycles there is a very strong case for the biggest sellers of fuel to cut their forecourt petrol prices further. Allowing for a generous 10p a litre margin, we should be seeing the petrol sold for around 161p a litre.”
Diesel prices fell by 8.35p per litre in August, a decline which the RAC says more accurately reflects the wholesale costs faced by retailers.
Supermarkets have traditionally offered the cheapest fuel - usually around 3p per litre less than the national average - but the latest RAC figures show that they are offering savings of just 1.6p and many independent forecourts are undercutting the big four supermarket chains. Its data also shows sharp regional variations in prices within the same supermarket chains.
Mr Dennis added: Some big supermarket sites aren’t too far off charging 161p per litre but there’s a real postcode lottery out there with prices varying wildly depending on where a driver is in the country. Drivers must shop around for the best deal they can, and we applaud those independent retailers who are doing their best to charge a fairer price for fuel and support their local communities through this incredibly expensive time.”
Mr Dennis warned that oil prices - which help determine wholesale fuel costs - could rise again soon if the OPEC+ nations decide to cut oil production and the pound continues to lose value against the dollar. He called for more government action to help protect drivers.
He said: “With many people heavily dependent on the car, drivers need all the help that they can get. We urge the incoming Prime Minister to heed our calls for more financial assistance for drivers, such as a deeper cut in fuel duty, and to look carefully at the much more generous packages of help being offered to those in other countries across Europe.”