The Chancellor will stagger the 3p rise in fuel duty which was due next month, amid concerns the price of petrol and diesel could reach record highs.

As part of his Budget today, he announced there will be a 1p rise in April, with a further 1p increase in October this year and again in January 2011.

Motorists are already facing the prospect of paying over 120p for a litre of unleaded petrol, according to motoring giant, the AA.

Therefore, the move is likely to prove popular as a pre-election giveaway (see the Record fuel prices MSE News story).

The average petrol price in the UK is 117.3p for a litre of unleaded and 118p for a litre of diesel, according to www.petrolprices.com.

Even without the 3p hike, the AA expects the price paid by drivers to hit 120p a litre soon.

This would overtake the previous high of 119.7p in July 2008.

The AA said the price increases were caused by the rise in the price of wholesale gasoline since the end of January.

AA president Edmund King says: "The UK is barely out of recession, yet petrol prices threaten to rise to record prices seen during the boom of 2008 - shortly before the collapse into recession.

"If families, drivers on fixed incomes and those on low pay were unable to cope with record prices then, they are even less likely now."

AA research found an average family with two cars is paying £52 a month more to fill up now than a year ago.

How to slash fuel costs

Joint MoneySavingExpert.com/RAC research has found you could cut fuel bills by up to 60% by following some simple steps.

That equates to a £1,500 a year saving for a household that spends £2,500 a year on petrol or diesel.

Here are our tips for drivers:

  • Look for cheap petrol promotions, particularly in supermarkets. The Cheap Petrol & Diesel guide is updated when promotions are announced.
  • Use Petrolprices.com to find the cheapest local filling station.
  • Accelerate and brake gently.
  • Turn off the air conditioning.
  • Keep your car aerodynamic by ensuring it is clean and free of its roofrack, unless in use.
  • Keep tyres properly inflated.
  • De-clutter your car to make it lighter.

Additional reporting by the Press Association.

Further reading/Key links

Drive down fuel costs: Cheap Petrol & Diesel
Find cheap filling stations: PetrolPrices.com

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