Tesco, Sainsbury's and Asda Cut Fuel Prices
Tesco, Sainsbury's and Asda Cut Fuel PricesReuters

Tesco, Sainsbury's and Asda have all upped the ante in the supermarket price war as the trio declare cuts on the price of petrol and diesel.

Both Sainsbury's and Tesco have said that they will drop the price by up to five pence per litre, while Asda more modestly decided to reduce petrol costs by one pence per litre and diesel by two pence.

Fuel prices have dropped in the UK despite tension in the middle-east and Ukraine, and they have now reached a two-year low with Brent crude prices dropping by 15% since 21 June.

"The wholesale price of both petrol and diesel has been low for around three months," said RAC fuel spokesman Simon Williams in a statement.

"As a result motorists have been enjoying some of the cheapest prices for over three years, but this cut will take us to a new low, the likes of which we haven't seen since late 2010, early 2011.

"Since the Scottish referendum the pound has rallied against the dollar which has created a much-appreciated downward pressure on fuel prices which are traded in dollars.

"It's great news for motorists that this is being swiftly passed on by retailers at the pumps."

Luke Bosdet of AA added: "A 5p cut in the price of petrol, lopping £2.50 off the cost of filling a typical fuel tank, will be particularly welcome as families get back to school runs and into their autumn routines."

Earlier in September, the Office for National Statistics said that falls in the price of motor fuels was one of the contributing factors to the decline in the Bank of England's interest rate as it fell to 1.5%.