UK inflation rose to 3.3% in the 12 months to March, driven by the conflict in the Middle East.
The rise from 3% in the year to February was largely due to increased fuel prices, with the average price of petrol rising by 8.6 pence per litre between February and March 2026, compared with a fall of 1.6 pence per litre between February and March 2025.
The average price stood at 140.2 pence per litre in March, the highest price since August 2024, as the conflict in the Middle East impacted oil and gas prices.
The figures from the Office for National Statistics provide the first official look at the impact of the conflict on the cost of living in the UK.
Charlotte Kennedy, chartered financial planner at Rathbones, said: “While oil and gas prices have eased from their recent peaks, they remain elevated and continue to pose a risk to the inflation outlook.
“Energy costs rarely stay contained – they tend to work their way into the broader economy, particularly in areas such as food and airfares, where higher input costs push prices higher.
“The pressure is building beneath the surface, but the full impact on food and drink prices may not yet be fully realised. As these costs work their way through the system, Britons are likely to feel the effects more noticeably in the months ahead.”
Industry commentators said the latest figures pose a challenge for the Bank of England, ahead of their interest rate decision next week.
David Bharier, head of research at the British Chambers of Commerce, said: “With spiralling energy costs and sustained supply chain disruption, the March inflation figure is more likely to be a floor than a peak.
“The Bank of England faces a stagflationary dilemma. Cutting rates risks embedding inflation but holding or raising them could wreak major damage on an already fragile economy.”
Danni Hewson, head of financial analysis at AJ Bell, shared a similar outlook.
“For the Bank of England, the spectre of stagflation will stalk MPC members as they sit around the table next week and try to keep their balance. If they don’t hike rates and inflation becomes embedded they will be accused of not acting soon enough, but if the UK does more than flirt with recession in the second half of the year they will face criticism for not doing enough to stimulate an economy struggling to remain steady.”
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