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Supermarkets slash petrol prices after RAC predicts £1 a litre

Last updated: 08:10 17 Dec 2014 EST, First published: 09:10 17 Dec 2014 EST

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Asda sparked the latest round of supermarket fuel price wars today by slashing another 2p off the price of petrol at its forecourts.

The cuts mean Asda customers will pay no more than 110.7p a litre for petrol and 117.7p for diesel.

That move led Sainsbury's (LON:SBRY) to reduce its petrol and diesel by the same amount, also from Thursday.

Morrisons (LON:MRW) and Tesco (LON:TSCO) quickly followed suit.

The news comes after the RAC predicated that petrol will dip below £1 a litre in the New Year.

The motoring organisation’s forecast is based on the price of Brent crude, which on Tuesday fell below $59 a barrel for the first time in five-and-a-half years.

If the RAC’s prediction proves to be correct, it would mean the price of petrol will be at its lowest level since mid-2009.

UK drivers have already seen the price of a litre drop this year from 130p to 116.9p, but they could fall to under 110.9p a litre in the next fortnight, suggests the RAC.

Diesel has also fallen by almost 16p a litre to 122.33p.

"Talk of prices going up like a rocket and falling like a feather could not be further from the truth as retailers have been quick to pass on savings at the forecourt," said RAC fuel spokesman Simon Williams.

Fuel retailers base pump prices on the wholesale cost of petrol and diesel, but there is typically a two-week ‘lag’ before pump prices change  because of the time it takes for fuel to work its way through the supply chain to the forecourt.

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