UK inflation accelerated to 3.3% in March, driven by a sharp rise in fuel prices caused by the US-Israeli war on Iran, according to the Office for National Statistics (ONS). The consumer prices index increased from 3% in February, matching City economists' forecasts.
The ONS reported that petrol prices jumped 8.6p per litre to 140.2p, the highest since August 2024, while diesel rose 17.6p to 158.7p, the highest since November 2023. Overall transport costs, including air fares, rose 4.7% year-on-year, up from 2.4% in February. Food inflation also climbed to 3.7% from 3.3%, driven by chocolate, confectionery, meat, fish and soft drinks.
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.” The conflict has pushed global oil prices close to $100 a barrel as the closure of the Strait of Hormuz throttles energy supplies.
The International Monetary Fund has warned that Britain faces the sharpest growth slowdown and joint highest inflation in the G7 this year. 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 Bank of England left interest rates unchanged but warned a prolonged conflict could force rate rises.
Economists expect inflation to fall in April when energy bill cuts take effect, but the rate may no longer drop close to 2% due to the war's impact. Martin Beck of WPI Strategy said inflation could peak at 3.5-4% this summer if diplomatic progress eases tensions, or head towards 5% if conflict escalates. Core inflation, excluding volatile items, eased to 3.1% from 3.2%.
