UK inflation accelerated to 3.3% in March, driven by the biggest jump in fuel prices in more than three years amid the Iran war. The Office for National Statistics (ONS) reported the consumer prices index rose from 3% in February, matching City forecasts.
Grant Fitzner, ONS chief economist, said: “Inflation climbed in March, largely due to increased fuel prices … Air fares were another upward driver this month, alongside rising food prices.” Petrol and diesel prices have soared since the start of the Middle East conflict, reflecting a jump in the global oil price to near $100 a barrel as the closure of the Strait of Hormuz throttles energy supplies.
The ONS said overall transport prices rose by 4.7% in the year to March, up from 2.4% in February, hitting the fastest annual rate since December 2022. The average price of petrol rose by 8.6p a litre to 140.2p, the highest since August 2024, while diesel rose by 17.6p to 158.7p, the highest since November 2023. Food price inflation climbed from 3.3% to 3.7%, driven by chocolate, confectionery, meat, fish and soft drinks.
Chancellor Rachel Reeves said: “This is not our war, but it is pushing up bills for families and businesses. That’s why it’s my number one priority to keep costs down.” The government has announced measures to cut energy bills, but economists warn that inflation may not fall as sharply as previously expected due to the war. The Bank of England left interest rates unchanged last month but warned that a prolonged conflict could force it to raise borrowing costs.
Core inflation, excluding energy, food, alcohol and tobacco, eased to 3.1% from 3.2% in February. Economists predict headline inflation could peak between 3.5% and 5% this summer depending on developments in the Middle East. Households also face a rise in energy bills in July when the Ofgem price cap is next updated.
