The chancellor looks to be on a collision course with motoring groups after he failed to drop plans to introduce a 3p a litre petrol price increase set to hit forecourts in August.

Despite oil prices hitting $125 a barrel, and the price of unleaded petrol expected to rise above £1.40 a litre this week, George Osborne chose not to help hard-pressed motorists with a further duty cut.

Osborne, who scrapped the annual fuel tax escalator and cut fuel duty by 1p in his March 2011 budget, said fuel would have been 6p a litre more expensive had he not taken his previous action.

He told the House of Commons he has eased the burden on the motorist by £4.5bn and said fuel duty would not rise faster than inflation, unless oil prices were to fall below £45 a barrel – around a third of the current price of crude oil.

In the runup to the budget, various motoring groups had campaigned for a further duty cut arguing that record high petrol prices were having a disastrous effect on individual household budgets and the economy as a whole.

Since March 2010, the price of petrol has risen 23.24p a litre or almost 20%. For a family with two petrol cars, the monthly fuel bill has risen £50 over the last 24 months.

AA president Edmund King described the chancellor’s lack of action as a “budget blow-out” that will force drivers off the road.

“We have heard much about tax allowances but the increase in fuel duty makes no allowance for car-dependent, rural and disabled drivers. Only last week the prime minister told American students that UK fuel prices would make them “faint”, yet the government seems intent on inflicting more pain for no gain on drivers. Ironically, such a hike in duty doesn’t necessarily help government finances as people will cut spending at the pumps and in shops, and it could fuel inflation,” he said.

The RAC predicted that petrol prices could well be above 150p a litre by August when the planned 3p a litre increase takes effect. With VAT added, pump prices will rise 3.62p a litre

“Drivers are being hit by record fuel prices on a daily basis with no sign of it ending. This was the chance to do the right thing for motorists who pay around £45bn a year in motoring taxes – instead he’s given them more pain at the pumps,” said a spokesman.

Osborne also announced that vehicle excise duty (VED) – road tax – will rise in line with inflation, apart from for lorry operators in which case it will be frozen.

He said the government is considering letting drivers spread the cost of buying their tax disc over several months paying by direct debit.

In a separate move, the chancellor defied a sustained campaign from the aviation industry when he announced that an 8% rise in air passenger duty will go ahead on 1 April.

Aviation industry officials say raising duties could hurt the economy as it forced passengers to avoid the UK.

Chief executives Carolyn McCall of easyJet, Willie Walsh of International Airlines Group, Michael O’Leary of Ryanair and Steve Ridgway of Virgin Atlantic, who led the opposition to the rise in duty, responded in a statement.

“At a time when the government talks about creating jobs and growth, its blinkered insistence on further increases in air passenger duty achieves precisely the opposite,” they said.

The Airport Operators Association said the UK already has the highest aviation taxes in Europe. “This new increase will hit the tourism industry and needlessly jeopardise the recovery of the economy as a whole,” it said.

Also buried in the budget supplements was news that from April 2013 the CO2 emissions threshold for the main rate of capital allowances for company cars will fall from 160g per km to 130g from April 2013, affecting mid-sized cars as well as gas guzzlers.

Employees with company cars will be hit as the top rate of company car tax for the highest-emitting cars will rise from 35% of the list price of the car to 37% in 2015. But employees running a diesel car might benefit – from 2016 the 3% diesel supplement to the calculation of their tax charge will be removed, reducing their tax bill.