Motorists received their first bit of good news in months last night as both Asda and Morrisons announced that they would cut the cost of unleaded and diesel fuel.

In the first signs of a summer price war, Sainsbury's also said that it would cut petrol by 5p a litre from Thursday for customers who spend £50 or more in stores. Tesco is already running a similar promotion.

Asda, which is dropping its prices by 3p a litre, and Morrisons, which is dropping by 4p, said that they were responding to the recent drop in the price of oil. Asda said that all 170 of its petrol forecourts across the country would sell unleaded petrol for 113.9p a litre and diesel for 128.9p a litre from this morning.The price of a barrel of oil has fallen from a recent peak of $147 (£75) to $130.

Motoring groups said that the news would come as a welcome relief to motorists. Neil Greig, director of the IAM Motoring Trust, said: “A price war is the best thing that could happen other than a tax cut. It's probably the only thing that will bring prices down.”Edmund King, president of the AA, said: “We will watch price movements like a hawk, and should fuel suppliers and retailers appear to be dragging their feet we will seek to expose this.”

Times Recommends

• Interest rate setters split for second month in a row
• BAA under pressure to sell three UK airports
• Investors fear inflation and financial upheaval