Drivers paid nearly £1 billion more for fuel at supermarkets last year due to increased margins, an investigation has found.

Watchdog the Competition and Markets Authority (CMA) said average supermarket fuel margins rose by 6p per litre between 2019 and 2022.

That led to an estimated combined additional cost of “around £900 million” for customers of Asda, Tesco, Sainsbury’s and Morrisons, a report stated.

The inquiry also found that an increase in margins on diesel across all fuel retailers cost drivers an extra 13p per litre during the first five months of this year.

In response to a recommendation in the report, the Government said it will introduce a new law forcing fuel retailers to make up-to-date pricing information available to third parties.

This is expected to lead to the creation of price comparison apps and websites, enabling drivers to find the cheapest fuel in their area.

The Government also pledged to hand new powers to a public organisation to “closely monitor” pump prices and “alert” ministers if further intervention is needed.

It intends to launch a consultation on the measures in the autumn.

Supermarket giant Asda was fined £60,000 by the CMA for failing to provide relevant information in a timely manner.

CMA chief executive Sarah Cardell said: “Competition at the pump is not working as well as it should be and something needs to change swiftly to address this.

“Drivers buying fuel at supermarkets in 2022 have paid around 6p per litre more than they would have done otherwise due to the four major supermarkets increasing their margins.

“This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations.

“We need to reignite competition among fuel retailers.”

Chancellor Jeremy Hunt said: “It isn’t fair that businesses are refusing to pass on lower prices to protect their profits while working people struggle with balancing their budgets.

“Consumers need to be treated fairly, and so we’re empowering drivers to find the best prices possible for their fuel by taking swift steps following the CMA’s recommendations.”

Energy Security Secretary Grant Shapps said: “Some fuel retailers have been using motorists as cash cows. They jacked up their prices when fuel costs rocketed but failed to pass on savings now costs have fallen.

“It cannot be right that at a time when families are struggling with rising living costs, retailers are prioritising their bottom line, putting upwards pressure on inflation and pocketing hundreds of millions of pounds at the expense of hardworking people.

“Today I’m putting into action the CMA’s recommendations and standing by consumers. We’ll shine a light on rip-off retailers to drive down prices and make sure they’re held to account by putting into law new powers to increase transparency.”

The AA claimed drivers have been “convinced” for many years that pump prices “shoot up” when costs rise but fall “much more slowly” when costs decline.

The RAC said it is “extremely pleased” that the Government is taking action.

An Asda spokesman said the fine related to “two individual alleged technical breaches” in the way information was shared, and insisted “we engaged fulsomely” with the inquiry.