British households have been told to brace for a surge in inflation and multiple interest rate hikes this year after surging oil and gas prices sparked by Donald Trump’s war on Iran.
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British households have been told to brace for a surge in inflation and multiple interest rate hikes this year after surging oil and gas prices sparked by Donald Trump’s war on Iran.
Tehran has launched a series of retaliatory strikes on energy sites in the Gulf since the conflict began, and has throttled the key shipping route of the Strait of Hormuz.
Israel, meanwhile, has targeted Iran’s South Pars gas field – the largest of its kind in the world.
The benchmark Brent crude oil currently sits at around $110 a barrel, compared to $72 before the war, while a unit of wholesale gas stands at 150p – almost double the 77p price just three weeks ago.
It adds up to bad news for the cost of living in the UK, where economists are now predicting inflation could hit 5% this year, while interest rates could be hiked two or even three times.
Sky News’s economics and data editor Ed Conway described the sudden shifts as “extraordinary”, with the pre-war expectation having been for inflation to fall to 2% and for the Bank of England to cut interest rates twice.
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