Fuel retailers receiving “a good prod” from the competition regulator has sparked a sharp cut in pump prices, according to new analysis.

Average petrol prices dropped twice as fast following a Competition and Markets Authority (CMA) report accusing retailers of not reflecting a decline in wholesale costs, the AA said.

It took 31 days for prices to decrease by 3.5p per litre from October 8.

In just 14 days after the CMA issued its report on November 8, prices reduced by 3.75p.

The regulator warned that in September and October, the differences between pump prices and wholesale costs of fuel were “significantly above the long-term average”, and a continuation of that trend would “cause concern” about a lack of competition.

AA pump price spokesman Luke Bosdet said: “It’s amazing what happens when the competition watchdog gives the fuel trade a good prod – pump prices fall at twice the speed and £2 comes off the cost of a tank of petrol within a fortnight.”

Legislation to give the CMA new powers – expected to come into force next year – to act as the UK’s fuel price watchdog is going through Parliament.

The regulator will have more ability to gather information to provide regular public updates on the state of competition in the UK fuel market, and will report evidence of unjustified price increases.

Many fuel retailers – including all four fuel-selling supermarkets – have signed up to a CMA scheme to share daily price data.

The Government intends to make this a mandatory programme.

Mr Bosdet said: “We will have to see how MPs giving the CMA a stronger role in scrutinising the fuel trade turns out in practice.

“However, evidence this month is extremely positive.

“Drivers just need the voluntary fuel price reporting scheme to become a statutory one, particularly along motorways and major routes.”

RAC fuel spokesman Simon Williams said: “The recent fall in fuel prices is definitely no cause for celebration as drivers are still losing out massively at the pumps because retailers refuse to cut their prices to reflect far lower wholesale costs.

“Average retailer margin on petrol is currently around 17p a litre – 10p more than the long-term margin.”

 Neil Lancefield Press Association