Petrol prices have fallen to their lowest in three years, the Automobile Association has said.

The AA said prices averaged 129.46p a litre in mid March, compared to 138.42p a litre a year ago, with the cheapest fuel being sold in Yorkshire and the Humber.

It also said there could be another fall of up to 2p shortly due to recent wholesale cuts.

In Wednesdays Budget, George Osborne unveiled another fuel duty freeze, which came as welcome relief for motorists who saw petrol prices rise as much as 138.32p per litre in February 2013.

This is particularly good news for freelancers and contractors who find themselves regularly on the road for business but who will not be able to claim back on expenses until they do their Self Assessment at the end of the year.

The UK is in a particularly good situation in comparison to other countries in the EU. According to the AA, 11 EU countries have increased or will increase fuel duty this year, including Holland, France, Sweden and Italy.

However, the AA said the news was tempered by data that showed real incomes have slipped to 2002 levels, after adjusting for inflation.

The organisation’s president, Edmund King, said:

“Appalling weather up until 10 days ago will have reduced car use and fuel consumption.

“However, official figures on inflation-hit earnings reveal a more persistent dark cloud hanging over the ability of UK drivers to use their cars. This is clearly making business difficult for fuel retailers too.”

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