Asda is cutting up to 2p per litre off its fuel prices after motoring groups claimed retailers were failing to pass on savings following the oil price slump.
The supermarket giant will lower a price cap at its 305 filling stations to 111.7p per litre for unleaded and diesel from Friday.
Last week the RAC claimed forecourt prices for diesel could be slashed by about 4p per litre while 2p could be taken off unleaded due to a fall in wholesale costs.
Oil dropped to 47 US dollars (£36) a barrel on Thursday, down 13% from May 23.
RAC fuel spokesman Simon Williams described Asda’s announcement as “excellent news.”
He said: “It should now encourage every other retailer to follow suit and lead to a much-needed price-cut chain reaction across the country.
“While the value of the pound has fallen since the election, the price of oil has also reduced, bringing down wholesale fuel costs which should rightly be passed on to motorists at the pumps.
“Unfortunately, a cut to the price of diesel is long overdue as its wholesale price has been lower than petrol’s for weeks, with little reflection of this on the forecourt.
“Hopefully, this will be the start of greater diesel price transparency.”
AA spokesman Luke Bosdet said: “UK average petrol prices have been stuck at around 116.5p a litre for the past six weeks and drivers were wondering when they were going to see the benefit of lower oil prices.
“Asda’s move will hopefully break the logjam.”
Asda’s head of petrol trading Dave Tyrer said: “Today’s latest move shows that Asda is once again leading the way in reducing the price at the pumps to help the millions of motorists across the UK.
“Our new national price cap of 111.7p per litre on both unleaded and diesel will be welcomed by the millions of drivers who will be starting to plan their summer holidays.”