Northern Ireland motorists will be paying £1 or less for a litre of petrol in the next couple of months according to the AA.

The motoring association predicted an ongoing fuel price war across the province between now and Christmas.

And the AA says the price cuts are a reaction to recent criticism over local pricing policies, which have been highlighted by the Belfast Telegraph’s Price Watch campaign.

The average UK price for a litre of petrol was sitting at 107.13p yesterday, but at forecourts in some areas of Northern Ireland it is already as low as 102.9p.

AA Public Affairs spokesman Luke Bosdet said it is only a matter of time before the price crashes back through the £1 a litre barrier — only this time it will be a step in the right direction.

The good news comes amid public outcry over the crippling cost of fuel in Northern Ireland, where drivers have been paying consistently more for petrol and diesel than the majority of motorists in the rest of the UK.

It also provides evidence that the big retailers — who have chopped up to 10p off both petrol and diesel in just one month — are listening to public concern as highlighted by our Price Watch campaign.

Speaking to the Belfast Telegraph, Mr Bosdet said the latest cuts — this time being driven by supermarket giant Tesco — would be welcomed by drivers here, particularly after the average petrol price hit an all-time high of 119.9p in mid-July.

“There is a distinct possibility we could see petrol costing £1 a litre by Christmas,” he said.

“With the price having already fallen to 102.9p in some areas, it’s not beyond the realms of possibility we’ll get to 99.9p – which would be a wonderful Christmas gift for drivers.

“It’s going to be very interesting to see how other retailers react to the latest price reductions, but Tesco must be congratulated for taking a lead at last in competitive pricing.”

Mr Bosdet added: “I think the latest price cuts are in response to political pressure in Northern Ireland and the UK. They are a reaction to recent criticism over local pricing policies, which were highlighted by the Belfast Telegraph’s Price Watch campaign, plus the fact the retailers recently had Prime Minister Gordon Brown tell them to bring prices into line with wholesale prices.”

Last week, rival Asda cut a penny off both petrol and diesel as oil prices plummeted to their lowest level in a year. The supermarket giant now charges 105.9p a litre for petrol and 116.9p for diesel across the UK, including all seven filling stations here.

Tesco, which has 12 forecourts in Northern Ireland, then retaliated by slashing its petrol prices to 102.9p a litre at four sites here and cutting diesel to as little as 113.9p at one forecourt.

Sainsbury’s has also weighed into the fray by offering petrol at 103.9p at two of its seven local filling stations, and by charging a 114.9p-a-litre-low for diesel at another site.

In direct contrast to this time last month when Tesco was charging up to 6p more for petrol than Asda, and drivers were being billed up to 2p extra at Sainsbury’s, all three supermarkets have now capped their petrol tariffs at 105.9p.

Similarly, diesel now costs a maximum of 117.9p a litre at one supermarket filling station, while motorists visiting the others will benefit from price tags of 116.9p or under. That compares with last month when drivers were facing price variations that meant paying up to 4p more for diesel at Tesco and up to 2p extra at Sainsbury’s.

Interestingly, even before the ‘Big Three’ introduced their latest price reductions, there was evidence to suggest that some independent retailers across Northern Ireland were undercutting their larger rivals.

For example, Tannaghmore Filling Station, situated between Antrim and Ballymena, was charging 104.9p a litre for petrol at the weekend, while it cost 105.8p at relatively nearby Tesco and 105.9p at Sainsbury’s, according to PetrolPrices.com.

Noel Smyth, regional manager of the Petrol Retailers Association, also predicted that petrol prices – which controversially passed £1 per litre for the first time in November 2007 – would fall in the coming weeks.

“I would be hopeful that prices would drop to £1 a litre in Northern Ireland because the price of oil is falling,” he said.

“I am very surprised that some of the independents have recently been undercutting supermarkets, but they must be reacting to today’s turbulent marketplace in their own way.”

A spokeswoman for Tesco said that prices are checked against competitors daily.

“As with the vast majority of petrol retailers in the UK, Tesco does not operate with one national price,” she said.

“Our clear goal for customers is to endeavour to be competitive on petrol and diesel in the local catchment area for each store so customers can fill up with confidence and not have to drive further a-field. Overall, we believe that Tesco has the best offer on petrol in the market.”

An Asda spokeswoman said they had no immediate plans to slash their fuel prices further. “Having already forced prices down, we’re glad to see Tesco has eventually followed our lead,” she said.

A spokeswoman for Sainsbury’s said: “We continue to review petrol prices daily. We aim to provide our customers with the best possible value for their fuel, and we price competitively on a local basis. In addition, our customers receive Nectar points on all petrol purchases.”

* If you are a retailer who has already reduced the price of petrol to £1 a litre or below, please contact us at pricewatch@belfasttelegraph.co.uk