UK inflation accelerated to 3.3% in March, driven by the Iran war sparking the largest rise in fuel prices in more than three years. The Office for National Statistics (ONS) reported the consumer prices index increase from 3% in February, matching City forecasts.
Petrol and diesel prices soared following the outbreak of the Middle East conflict, reflecting a surge in global oil prices to nearly $100 a barrel as the closure of the Strait of Hormuz disrupted energy supplies. Average petrol rose by 8.6p per litre to 140.2p, while diesel climbed 17.6p to 158.7p, the highest levels since August 2024 and November 2023 respectively.
Food price inflation edged up from 3.3% to 3.7%, driven by chocolate, confectionery, meat, fish, and soft drinks. The Food and Drink Federation warned it could hit 9% by December if the Strait of Hormuz closure affects fertiliser supplies. Core inflation, excluding volatile items, eased slightly to 3.1% from 3.2%.
ONS chief economist Grant Fitzner noted: “Inflation climbed in March, largely due to increased fuel prices… Air fares were another upward driver, alongside rising food prices.” Chancellor Rachel Reeves said the government was acting to protect consumers, stating: “This is not our war, but it is pushing up bills for families and businesses.”
The International Monetary Fund has warned that Britain faces the sharpest growth slowdown and joint highest inflation in the G7 this year amid recession risks. Economists predict inflation may peak at 3.5–4% if diplomatic progress eases tensions, but could hit 5% if the conflict escalates.
The Bank of England left interest rates unchanged, warning prolonged disruption could force future rises. Financial markets expect at least one rate increase this year, though a weak growth outlook and elevated unemployment may limit the impact on wages and prices.
