In general petrol prices have been cut ahead of the bank holiday weekend with supermarkets leading the way snipping 2p off the price per litre. It hasn’t stopped independent retailers also slashing a pennies off the pump price with the AA citing one London retailer as selling petrol at £1.26p a litre. So what is going on?

Despite all the terrible news coming out of the Middle East there is an oil glut. Oil prices have been falling since June with extra oil coming onto the market from Libya, Saudi Arabia and the USA while in Europe, due to the stagnant economy, demand has been lower than normal. Plus there is that old fashioned reason: a price war. Supermarkets are aware that shoppers will go into their larger stores if fuel is low for their weekly shop at the store’s fuel station. It’s not just milk, bread and the basics that are used to lure the general public into their doors, fuel is also a marketing tool.
This is welcome news for sign-makers with more good news published today by the Office of Na-tional Statistics (ONS) who say inflation is down to under two percent at 1.6%, although wages have again fallen behind in the last quarter with only a 0.6% rise. The news that fuel is down and inflation is also lower than it has been in years will cheer small firms as running a fleet of vans and buying materials are affected by fuel prices and the rate of inflation.

The news is also good for those with hefty overdrafts, business loans or mortgages linked to their business as the chance of a rise in interest rates looks unlikely. Bank of England governor Mark Carney said the bank was not going to be pushed into raising interest rates sharply or immediately because the inflation outlook remains pretty subdued.

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