UK inflation rises in March as prices at pump spike higher after Iran war

London: Inflation in the UK climbed in March after a sharp jump in prices at the pump in the wake of the disruption to energy supplies caused by the Iran war, official figures showed Wednesday, April 22.

The Office for National Statistics said the annual consumer price inflation rate increased to 3.3% from 3% the previous month. The rise was in line with market expectations.

Analysts said the increase has put paid to any expectations that the Bank of England would cut borrowing costs. Prior to the start of the war on Feb 28, there had been an expectation in financial markets that the bank would cut its main interest rate from 3.75% given that inflation was predicted to fall back toward its 2% target during the spring.

The main reason behind the inflation spike was higher motor fuel, which increased by a monthly 8.7% — the largest increase since June 2022, shortly after the Russian invasion of Ukraine. Airfares and food prices, both related to the spike in energy prices, were also higher.