UK inflation rose to 3.3% in the year to March, up from 3% in February, with higher fuel prices the main driver behind the increase. According to the Office for National Statistics, the rise was largely linked to a sharp jump in petrol and diesel costs, while food prices and air fares also added to the pressure.
The figures offer the first official indication of how conflict in the Middle East is feeding into the UK cost of living. Since the war involving Israel, the US and Iran began on 28 February, wholesale energy prices have risen sharply as production and transport across the region have been disrupted by missile strikes and drone attacks. The ONS collected its March data in the middle of the month, meaning the impact was already beginning to show.
Motor fuel prices rose by 8.7% over the month, the biggest increase since June 2022, shortly after Russia’s invasion of Ukraine. Over the year, fuel prices were up 4.9%, the highest annual rise since January 2023.
Food inflation also rose, from 3.3% to 3.7%. Chocolate, confectionery, meat, fish, and soft drinks all contributed, though some of this may reflect Easter being earlier this year. Air fares also increased, again partly because of Easter timing.
Economists now expect inflation to remain higher for longer, perhaps reaching 3.5% to 4% this year. That could make it harder for the Bank of England to cut interest rates, as higher energy costs risk pushing prices up while also slowing wider economic activity.
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