Tesco 'cheapest petrol' claim false

WHEN it comes to petrol, you simply cannot buy cheaper. That's the proud boast from Tesco, which claims its filling stations will match the lowest prices in the area.

And it is a hugely significant pledge because petrol is one of the few items whose price most shoppers carry in their heads. It is, to use the terminology beloved of marketeers, a known value item.

Cheap petrol sends out a clear message to shoppers - if the price on the forecourt is low, the prices of groceries and everything else inside the store are likely to be low as well.

But Tesco is today revealed as the most expensive of the big supermarket petrol retailers. Research shows that the average price for unleaded petrol and diesel at Tesco stores is higher than at Safeway, Morrisons, Sainsbury's or Asda.

And after investigations by the Financial Mail on Sunday, Tesco has been forced to admit that its claim that its petrol stations will always match the best local price is not as straightforward as it seems.

Tesco does not give an average price for petrol at its 366 filling stations. 'We have a local pricing policy,' said a spokeswoman. 'We won't be beaten on price. We will offer customers the lowest price in an area...in a three-mile radius.'

The pledge sounds simple enough. But Financial Mail has established that there are several Tesco petrol stations that come nowhere near their neighbouring rivals on price.

A Tesco store in Addlestone, Surrey, was selling unleaded petrol at 80.9p a litre on Thursday. A Sainsbury's store at Chertsey - only two miles away - was selling unleaded at 78.8p a litre.

Tesco admits that its three-mile rule does not apply within the M25. In and around London, Tesco matches prices only within one mile of its stores.

That explains the disparity between the Sainsbury's price at Chertsey and Tesco's dearer price at Addlestone. And there are several other examples where Tesco is more expensive than filling stations within three miles.

Across the country, Asda and Morrisons have the lowest average fuel prices among the supermarkets, according to figures compiled by Catalist. The market researcher looked at typical prices being charged by petrol stations last Wednesday. They showed an average price for Asda and Morrisons of 78.9p a litre for unleaded petrol. The figure for Tesco was 80.18p.

But that has not stopped Tesco boasting about its competitiveness and success.

Last week, the market leader unveiled figures showing that underlying UK sales in the three months to May were up by an astonishing 7.8%. Profits this year - helped by big investments on the Continent and the Far East as well as the UK and the Irish Republic - are expected to hit £2bn.

At Friday's annual shareholder meeting, chief executive Sir Terry Leahy gave a list of five areas where Tesco was making progress. One was 'lower prices'. He said the company had 'increased the number of great-value retail services'.

And he said that a basket of 41 'value' items - the cheap-and-cheerful range introduced a decade ago in the face of the perceived threat from discounters such as Lidl, Netto and Aldi - would now cost one-third less than it did in 1994.

Happy shoppers may be content to take Leahy's price pledges at face value. Motorists, on the other hand, might well start to question his mathematics.