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Competition forces petrol below £1

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The average cost of petrol has dipped below the £1-a-litre mark for the first time in a year as competition among supermarkets takes effect on prices, motoring organisation the AA has said.

The average cost of a litre of petrol is where it was around the end of October 2007 - at 98.63p.

A family with two petrol cars now pays around £45 a month less for fuel than in mid-July when petrol peaked at 119.7p a litre.

The average price of diesel is now 111.0p a litre, according to the latest figures from the AA.

A survey has shown that 68% of drivers generally buy their petrol from supermarkets and this is why the average price has come down so quickly.

AA president Edmund King said: "The survey findings help to explain the dramatic reductions in the average price of UK fuel since October 10 when all the supermarkets decided to engage in a fierce price war - rather than just half of them matching prices locally.

"Asda, and to some extent Morrisons, trail-blazed lower prices throughout the summer, but it took the size and the full participation of the others to produce the record falls in price seen over the past fortnight."

© The Press Association 2008