The price of petrol continued to fall today after supermarket Tesco cut 3p a litre from unleaded and diesel at its 430 petrol filling stations.
The reduction, which represents the latest shot in a supermarket price war, comes a day after the AA motoring organisation revealed the price of petrol had hit a three-year low.
The AA said the average cost of petrol at the beginning of this week was 87.79p a litre compared with 88.27p at the end of December 2005. Diesel is now averaging 99.72p a litre - the lowest price since November 2007.
With petrol hitting a record high of 119.7p a litre in July this year, a UK driver is on average now paying nearly £16 less to fill up a typical 50-litre tank than during this last summer. A family with two petrol cars is now spending £68.39 less a month on fuel.
Tesco said its lowest petrol price was now 82.9p a litre.
Retailers have been able to cut forecourt costs after a sharp slump in the price of oil.
New York-traded crude hit a record $147.27 a barrel on 11 July, driven by speculation that soaring growth in emerging economies, such as China and India, would boost demand for crude. Prices also rose 57 per cent in 2007 to $95.98 a barrel.
However, prices went into reverse in the second half of 2008 as the global economic crisis impacted on consumer spending and industrial production.
The New York price fell to its lowest in almost five years at 33.87 earlier this month, although fears this week that the conflict between Israel and Hamas in Gaza could heighten tension in the oil-rich Middle East bolstered prices towards 40 US dollars a barrel.
The AA said new retail fuel sales figures released by the Government showed that petrol sales in July-September 2008 - the period of peak prices - fell by 8.2 per cent compared to the same time last year.