Petrol and diesel prices are coming close to a record high after a rise in fuel tax by 1 penny. The rise came into effect at midnight.

The motoring body, AA, has forecast that petrol prices could reach an average of 120p a liter in a few days.

This increase in duty rise is already accompanied by a continuous elevation in the wholesale price of fuel. This situation is worsened by a weaker pound which adds to the cost of imported fuel.

This rise is part of a three-stage fuel duty increase which was announced in the Budget. It is the first step of the increase in fuel duty.

Earlier it was planned that fuel tax would rise altogether by 3p a liter on 1 April. However, Chancellor Alistair Darling has decided to segment the increase and implement it in three stages instead. The second and third stages of the increase in fuel duty will take place in October and January respectively. The rise in both the stages will be by 1p.

Currently the average price of unleaded petrol is 117.93p per liter and of diesel is 118.51p.