The news is expected to spark a price war between other supermarkets and leading petrol providers, which could help to reduce inflation that now stands at a high of 5.2 per cent.

The ASDA and Morrisons pump price for unleaded have both dropped to 99.9p/litre, and ASDA is charging 110.9p/litre for diesel, compared to 111.9p at Morrisons, the lowest prices seen so far this year.

According to ASDA, the price cut will knock £10 off the cost of filling up, compared to when prices peaked in July this year at 117.9p/litre of unleaded.

The price cuts have followed a reduction in the price of crude oil, which again peaked in July this year at $143 a barrel compared to its current cost of around $80 per barrel.

Commenting on the price cuts, ASDA trading director Darren Blackhurst said: “Drivers should not be paying more than 99.9p a litre for unleaded fuel based on current oil prices. Past experience tells us that unless they live near an ASDA they still will be.”

However, Morrisons claims it took the lead when it came to the price cut, highlighting the competitive nature of supermarkets. Morissons’ chief executive, Marc Bolland, said:

“We’re taking the lead again in cutting fuel prices and taking unleaded back to below a pound a litre. This is strong support for the millions of motorists that are served at our forecourts.”

And it is not just supermarkets that are passing the price drops on to consumers, airlines have also begun to reduce costs. British Airways announced last night that it will be reducing the fuel surcharge for passengers travelling in its World Traveller and World Traveller Plus cabins.

Energy providers are now expected to follow suit and reflect the fall in oil prices in the UK’s energy bills after increasing gas and electricity prices by more than 30 per cent this year.

© Fair Investment Company Ltd