In the News

Profit Margins - Are supermarkets taking advantage of drivers?

Graham Watson

5th October 2022

Petrol prices are often faster to rise when market conditions change than they are to drop when cost pressures are easing. Are the supermarkets using this moment to increase their profit margins on each litre of fuel sold?

This is an important issue to follow from a microeconomic perspective and it also has macroeconomic effects.

Have supermarkets being astute in raising profit margins at a time when fuel prices have reached historic highs?

Read this article in the Guardian

It would seem so, with the RAC suggesting that margins have risen from 7p per litre to 17p in some instances, and the difference in price between supermarket prices and conventional petrol retailers halving to 1.5p per litre.

Previously, of course, supermarkets often used fuel to attract customers to their stores - slashing margins to the bone and offering petrol stations simply because they are simply more profitable than having larger car parks, a lovely demonstration of the importance of opportunity cost to business decisions.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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