UK inflation rose to 3.3% in March, its highest level since December, driven by a sharp increase in fuel prices due to the ongoing conflict in the Middle East. The Office for National Statistics (ONS) confirmed the rise from 3.0% in February, in line with economists' predictions. Motor fuel prices surged by 8.7% month-on-month, the largest increase since June 2022, shortly after Russia's invasion of Ukraine. The average price of petrol rose by 8.6p per litre to 140.2p, while diesel prices increased by 17.6p per litre to 158.7p, the highest since November 2023.
Airfares and food prices also contributed to the inflation rise, though clothing costs rose less than the previous year. The ONS noted that the cost of raw materials and factory goods increased significantly due to higher crude oil and petrol prices. Chief economist Grant Fitzner stated that sustained energy price hikes could further drive up food costs.
Chancellor Rachel Reeves acknowledged the impact of the conflict, stating, 'This is not our war, but it is pushing up bills for families and businesses.' She highlighted government measures to mitigate costs, including £117 off energy bills, frozen rail fares, and a fuel duty freeze. Economists warn that inflation may accelerate further as the war's effects ripple through the economy. The Bank of England is weighing whether to raise interest rates at its next meeting on April 30, though most economists expect rates to remain unchanged for the year.