Supermarkets are cutting fuel prices.

Asda said it will reduce the cost of diesel by 3p per litre and petrol by 2p per litre.

That means drivers using an Asda filling station will pay no more than 121.7p per litre for petrol and 125.7p per litre for diesel.

Sainsbury's and Morrisons confirmed they were making the same reductions in price to both diesel and petrol. The RAC claimed retailers should reflect a drop in the wholesale cost of petrol by reducing prices. Oil has been trading at around $60 a barrel since the beginning of the month.

This has caused the wholesale cost of petrol to fall steadily since October 7, according to the RAC.

The motoring services firm's fuel spokesman, Simon Williams, said: "Drivers are losing out badly, paying around 7p a litre more for petrol than they should be.

"This means a driver filling up a 55-litre family car is paying £3.85 too much.

"For some reason, in the last year or so our biggest retailers haven't been as transparent with their pricing as they have been in the past, which means motorists all over the country lose out as a result of them taking more margin than they have previously."

Asda senior fuel buyer Dave Tyrer said: "With wholesale costs falling and half-term just around the corner, we're pleased to be able lower the cost of fuel and pass these savings on to our customers."

David Pegg, fuel buying manager for Sainsbury's, added: "As we gear up for the upcoming busy festive period, we are committed to helping our customers live well for less, whether they're stocking up on groceries or refuelling their cars."