British drivers are facing petrol prices near record highs as the conflict between Israel and Iran keeps global crude elevated, feeding through to the forecourt and threatening to revive inflation just as it had begun to ease. Pump prices have climbed to around 157.6p a litre, with the cost of filling up rising steadily since the war disrupted oil and gas flows in the Middle East.
The increases have been swift. Petrol rose by about 14 pence a litre, roughly 10%, between late February and late March, while diesel jumped by around 29 pence, about 20%, over the same stretch as the conflict drove up wholesale costs. Household gas bills are expected to climb later in the year as higher energy prices work through the system.
Economists warn the energy shock could push inflation back up after a period of relief. Consumer price inflation eased to 2.8% in April, down from 3.3% in March, helped by a lower household energy price cap. But transport costs, driven by the surge in petrol prices since the start of March, made the largest upward contribution to inflation since late 2022.
The conflict has weighed on the broader economy as well. Both the International Monetary Fund and the OECD have marked down the United Kingdom's 2026 growth forecast by half a percentage point, among the largest downgrades of any advanced economy. Analysts at the Resolution Foundation note that rising inflation concerns have pushed up government borrowing costs, with benchmark gilt yields hovering near their highest levels since the financial crisis.
Businesses and households are feeling the squeeze. The National Farmers' Union has warned that food prices are likely to rise on the back of higher energy and fertiliser costs, while manufacturers have flagged the burden of elevated industrial energy prices on their competitiveness.
With crude prices sensitive to every twist in the Middle East conflict, forecasters say UK inflation could climb back toward 4% in the second half of the year if the war keeps energy markets on edge. That prospect complicates the outlook for the Bank of England, which must balance the risk of entrenched inflation against an economy already growing only sluggishly.