As petrol prices punch through the £1.30 a litre mark, retailers particularly those in hard to reach areas and with forecourt sites are reporting a squeeze on margins and falling sales.

Independent retailer Jonathan James, who owns six stores including four forecourt sites, said he had noticed a significant decrease in fuel volumes and store sales in recent weeks. "Consumers are clearly very price-conscious at the moment and grab at even the smallest opportunity of saving money. For example, when Tesco started a 'spend £50 and get 5p off every litre of fuel' promotion last month, one of my sites recorded an instant 10% decline in volume."

Jonathan joined the chorus of other retailers imploring the government to axe the planned 1p rise in fuel duty on April 1.

Retailers are also fearful that the rising price of fuel will prompt wholesalers to pass on the extra costs in the form of increased prices.

The Federation of Wholesale Distributors confirmed that record fuel prices were making its members' margins "narrower by the day", but it remained tight-lipped about how, and if, this impact would affect the price of goods and services.

Other service providers said they had been forced to pass on costs. Green food waste recycling company Cawleys, which serves a number of retailers including Budgens Crouch End store owner Andrew Thornton, said it had "no choice" but to levy a 2.1% surcharge on its existing rates.

However, Rural Shops Alliance chairman Trevor West also pointed out that while "undercapitalised" rural businesses could be driven to the wall by rising prices, some convenience stores were benefitting as shoppers ditched the car and weekly supermarket shop in favour of buying locally.

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