UK inflation set to rise after Middle East conflict pushed up fuel prices

Higher fuel prices are set to have driven an increase in UK inflation last month, according to analysts.

The Office for National Statistics (ONS) will shed further light on how the conflict in the Middle East is impacting on the cost of living for Britons on Wednesday morning when it unveils the latest official inflation data.

Consumer Prices Index (CPI) inflation is expected to have risen to 3.3% in March, according to a consensus of experts.

It would push inflation to its highest level since December.

The Bank of England and most economists have indicated that price increases are set to accelerate in the coming months as the impact of the Middle East conflict feeds into the cost of products and services.

Last month, the Bank of England indicated that inflation is likely to rise to as high as 3.5% by the third quarter.

Earlier this month, the International Monetary Fund (IMF) suggested spiking energy prices could help push UK inflation towards 4%, double the Bank of England’s 2% inflation target.

At the start of the year, the central bank had predicted that inflation would dip below the 2% target in April.

However, the conflict between US-Israeli and Iranian forces since late February has led to a sharp increase in oil and gas prices, while disruption to the Strait of Hormuz shipping corridor could hit other areas.

The latest data for March will be the first set of ONS figures to include elevated petrol and diesel costs since the start of the conflict.

RAC data from Thursday April 16 showed that the average price of a litre of petrol at UK forecourts was 158.1p, 25p more expensive than when the war began on February 28.

The average price of a litre of diesel sits at 191.2p, up 49p compared with the start of the war.

Economists at Oxford Economics said they expect the rise in pump prices to add between 0.2 and 0.3 percentage points to the rate of inflation in March.