LONDON – New official data released Wednesday confirms that United Kingdom inflation ticked upward in March, driven by a dramatic surge in fuel prices triggered by widespread energy supply disruptions stemming from the ongoing conflict in Iran.
The Office for National Statistics (ONS) reported that the annual consumer price inflation rate climbed to 3.3% this March, up from 3% recorded in February. This upward shift aligned exactly with projections shared by financial market analysts ahead of the data release.
Market observers now confirm that this unexpected (but widely forecast) inflation spike has erased any remaining hopes that the Bank of England would move to lower borrowing costs in the near term. Before the Iran conflict erupted on February 28, financial circles widely predicted that the central bank would cut its benchmark main interest rate from the current 3.75%. That forecast was built on expectations that inflation would gradually fall back toward the Bank of England’s 2% target by the spring months.
A breakdown of the inflation data shows that higher motor fuel prices were the single largest contributor to the overall increase. Fuel prices jumped 8.7% between February and March, marking the steepest monthly rise since June 2022 – a period that saw similar energy market volatility shortly after Russia’s full-scale invasion of Ukraine. Beyond pump prices, secondary upward pressure came from airfares and grocery costs, both of which tracked higher as a knock-on effect of the broader energy price spike.