Petrol prices have fallen to their lowest point since the summer of 2021.
New analysis from RAC Fuel Watch shows that the average UK price of unleaded petrol dropped to 131.91p per litre in January, falling by more than 3p over the month.
This is the lowest price recorded since July 2, 2021, when it stood at 131.81p.
Simon Williams, head of policy at the RAC, said: "Seeing the price of petrol dip under 132p is a genuine boost for drivers, rewinding prices to those we last saw four and half years ago.
"And with even cheaper prices available depending on where drivers fill up, this is a positive start to the year for household budgets, especially so soon after Christmas."
The recent price drop follows a 2p reduction in December, meaning petrol has fallen by more than 5p per litre since the beginning of December, when it was priced at 137.17p.
For a family car with a 55-litre tank, this translates to a saving of £2.90 per fill-up, with a full tank now costing £72.55.
The fall in prices has been attributed to oil dropping below $60 a barrel on January 7 for the first time since February 2021.
Diesel prices also fell by 3p in January to 140.97p per litre.
However, this remains above the start of July 2021 levels of 134.36p and above the lowest price in 2025, which was 138.14p per litre on June 9.
A full tank of diesel now costs £77.53.
Despite the fall in pump prices, the RAC believes retailer margins remain high.
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Mr Williams said: "The Competition and Markets Authority’s 2025 annual road fuel monitoring report published in December said competition in the sector had not strengthened and retailer margins remained at historically high levels, and in some cases had increased.
"So, had retailers passed on more of the savings they’ve benefitted from when buying new fuel supply on the wholesale market, the January price reductions would probably have been bigger."
The Government instructed the CMA to monitor fuel retail competition in 2022.
The authority found that drivers were overcharged by £900 million in 2022 and by £1.6 billion in 2023.
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