Petrol prices are 6p higher than they should be because of weakening competition between supermarkets after they took on heavy debts and buyouts, the monopolies watchdog has said.

The Competition and Markets Authority (CMA) fined Asda £60,000 after claiming it had been lowering prices at the pump at a slower pace than the fall in wholesale prices.

The 6p increase more than completely offsets a 5p cut to fuel duty introduced by the Treasury in 2022, which is costing taxpayers £2.4bn a year.

In its report, the CMA said drivers buying petrol and diesel at supermarkets in 2022 paid around 6p per litre more than they would have done otherwise, because of the Big Four supermarkets increasing their profit margins.

Sarah Cardell, chief executive of the CMA, said: “Competition at the pump is not working as well as it should be and something needs to change swiftly to address this.”

The regulator has proposed the launch of a “fuel finder scheme” to help drivers find better prices online which would make it compulsory for retailers to make their prices available in real time.