This marks the primary dataset for the reason that outbreak of the US-Israel conflict on Iran, which sparked fears of an inflationary shock.
The most recent inflation outcomes have been launched at the moment (Picture: Getty)
UK Inflation rose to its highest stage since December after the conflict within the Center East despatched gasoline costs rocketing. The speed of Shopper Costs Index (CPI) inflation elevated to three.3% in March from 3% in February, the Workplace for Nationwide Statistics stated. This index, which exhibits how briskly the costs are rising or falling within the UK, marks the primary dataset for the reason that outbreak of the US-Israel conflict on Iran on February 28, which first sparked fears of an inflationary shock.
Greater motor gasoline costs have been the principle driver of the leap in inflation, rising 8.7% month-on-month – the most important improve since June 2022, shortly after the Russian invasion of Ukraine. Workplace for Nationwide Statistics chief economist Grant Fitzner stated: “Inflation climbed in March, largely as a consequence of elevated gasoline costs, which noticed their largest improve for over three years. Air fares have been one other upward driver this month, alongside rising meals costs.”
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Greater motor gasoline costs have been the principle driver of the leap in inflation (Picture: Getty)
He added: “The one vital offset got here from clothes prices, the place costs rose by lower than this time final yr.”
It comes after the efficient closure of the Strait of Hormuz as a result of conflict, which has disrupted vitality imports from the Gulf area. Because of this, oil costs have risen globally, resulting in larger distribution prices that may have an effect on the costs of on a regular basis gadgets, together with meals.
Chancellor Rachel Reeves stated the Iran disaster was “not our conflict, however it’s pushing up payments for households and companies.”
She stated: “We’re appearing to guard individuals from unfair value rises in the event that they happen to convey down meals costs on the until, and are boosting long-term vitality safety — constructing a stronger, safer financial system.”
The common value of petrol stood at 140.2 pence per litre in March 2026, the best value since August 2024, when it was 142.3 pence per litre. The common value of diesel stood at 158.7 pence per litre in March 2026, the best value since November 2023, when it was 159.0 pence per litre.
Air fares rose by 10.0% between February and March 2026, in contrast with a fall of 0.3% a yr in the past, marking the most important improve between February and March since 2016, when it was 22.9%.
Meals and non-alcoholic beverage costs rose by 3.7% within the 12 months to March, up from 3.3% in February. This rise was pushed by elevated prices for chocolate, confectionery, meat, fish, and smooth drinks, the ONS stated.
Dr Liliana Danila, chief economist at The Meals and Drink Federation (FDF), stated: “The clouds are gathering, however the storm has not but damaged on rising food and drinks inflation.
“The conflict in Iran has delivered a value shock that’s already too massive for producers to soak up in full.”
Dr Danila stated the influence on costs will take some time to work its manner by way of the system, however it’s “solely a matter of time” earlier than it does.
She added: “For producers, long-term contracts with suppliers and retailers imply it may take as much as a yr for larger prices to be absolutely handed by way of.
“However the place merchandise are much less processed, or provide chains are shorter, costs will transfer extra rapidly. Because of this, absent of any Authorities intervention, we count on a gradual however persistent pickup in meals inflation, reaching round 9–10% by the top of the yr.”
She added: “This implies we’re in a vital window for motion to restrict the influence on consumers. We’re working with Authorities to take a look at the levers they will pull now to help meals producers now to melt the blow on shoppers later within the yr.”
Meals value inflation jumped from 3.3% in February to three.7% in March (Picture: Getty)
What’s inflation?
Inflation is the financial time period to explain the sustained improve in costs for items and companies inside a selected time period.
The products and companies analysed embody every thing from meals, transportation, and resort prices to medical care and are weighted in the direction of the areas most consumed by households.
The Shopper Value Index (CPI), the worldwide measure that tracks inflation, elevated to three.3% in March 2026, that means items now price 3.3% greater than they did final yr.
March’s 3.3% rise was its highest stage since December, which is transferring additional away from the Financial institution of England’s 2% goal.
Nevertheless, that is nonetheless far beneath the 11.1% peak triggered in October 2022 after Russia’s full-scale invasion of Ukraine, which was the best fee seen in 40 years.
The Financial institution of England screens CPI when setting rates of interest. If inflation is just too excessive, the Financial institution could elevate rates of interest to sluggish client spending and funky the financial system, which is nice information for savers, however will hit these with variable mortgages and money owed.
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Jeremy Batstone Carr, European strategist at Raymond James Funding Companies, believed a right away coverage adjustment by the Financial institution of England later this month was unlikely.
“Whereas opting to carry the bottom fee at 3.75% in a unanimous resolution at its final Financial Coverage Committee assembly, the Financial institution of England indicated it stands able to take applicable motion to curb inflationary pressures.
“Whereas monetary markets initially interpreted this hawkish shift as a sign that rates of interest may be raised as quickly as subsequent week, it could nonetheless take a number of months for the anticipated fee hike to materialise.”
Suren Thiru, chief economist on the Institute of Chartered Accountants in England and Wales, predicted vitality prices and meals costs have been more likely to elevate the headline fee above 4% by the autumn, regardless of slower financial demand.
He stated the “disheartening resurgence in inflation confirms stagflation fears” as notable will increase in airfares, gasoline and meals costs triggered by the Iran conflict drove an unnerving leap within the headline fee.
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