Fuel prices in the UK have risen since the start of the Middle East conflict, with the RAC reporting increases in petrol and diesel costs this week. Analysts warn that households could face a 10% rise in energy bills in July, as the ongoing crisis keeps oil and gas prices elevated.
The Resolution Foundation has warned that the conflict could trigger an energy price shock that wipes out the modest living standards gains expected for working-age families this year. The thinktank said that if recent rises in oil and gas prices persist, they could add around a percentage point to inflation and increase typical annual energy bills by £500.
Cornwall Insight has predicted that the UK’s energy price cap could rise by 10% in July, adding to the financial strain on households. The potential increase follows a period of relative stability, but the Middle East disruption threatens to reverse any improvements.
Ruth Curtice, chief executive of the Resolution Foundation, described the economic outlook as “highly uncertain”, noting that the spring forecast already looks out of date. She said a fresh energy price shock risks puncturing the good news of a bumper rise in living standards for lower-income families, who were set to gain £800 over the coming year.
While the impact may not be as severe as the surge caused by the Russian invasion of Ukraine, the foundation said the jump in energy prices could still deliver a significant blow. European stock markets rallied on reports of secret outreach between Iran and the US to end the conflict, with the FTSE 100 rising 1%.
