UK inflation has edged higher again to 3.3%, deepening the squeeze on households and complicating the Bank of England’s next move. With headline CPI pushed up by energy-led price pressures linked to disruption in the Middle East, policymakers are having to weigh a fresh inflation shock against signs of a weakening domestic economy, while consumers face the prospect of further rises in household bills in the months ahead.
The latest inflation figures also suggest the pressure on prices may not fade quickly. While part of the increase was widely expected, higher energy and transport costs are still feeding through the system, and the full impact of recent rises in household bills has yet to come through in the data. That leaves the Bank of England facing a difficult balancing act: whether to keep policy steady and wait for more clarity, or respond to inflation that risks proving more persistent even as growth and consumer confidence remain fragile.
Experts are reacting to the latest figures below:
Sarah Pennells, consumer finance specialist at Royal London said:
“As expected, the inflation rate in the UK rose during March, placing added pressure on people’s finances. This will leave many feeling the squeeze as prices for goods and services continue to climb and now at a faster pace than they were previously.
“However, these latest figures don’t include the raft of changes to household bills that came into effect on April 1st and don’t fully reflect the food and fuel increases resulting from the conflict in the Middle East.
“Concern among consumers about their ability to manage everyday expenses will likely be increasing alongside inflation, and wider economic pressures, linked to interest rates and food costs. Some will doubtless make cutbacks to regular spending, but others may have little or no room to manoeuvre.
“However, if you’ve not reviewed your spending and budget recently and have been loyal to the same supermarket, broadband and mobile provider, you may be able to make savings. There are three ways to improve your finances when costs are rising: to spend less, to increase your income, and to get better value from the money you do spend. So, start by tracking what you spend, which banking apps make much easier to do, and see if there are areas where savings can be made. Keep an eye out for any better deals on offer for energy, broadband and your mobile phone; you should consider switching providers if it makes financial sense. Also, see if there’s any money you’re entitled to that you’ve missed out on – as billions of pounds in state benefits go unclaimed every year and there’s vast amounts in lost savings accounts, old pensions and unclaimed Premium Bond prizes as well.
“Checking for supermarket discounts or loyalty schemes will also help, as will setting a weekly budget, cooking meals from scratch, and planning purchases ahead.
“Finally, reaching out to organisations offering free, impartial help and advice can provide valuable support if you’re struggling to manage rising costs. If you do find yourself unable to pay your bills, speak to your provider at the earliest opportunity as there are often more help options available before things reach crisis point.”
Lindsay James, investment strategist at Quilter:
“This morning’s inflation data showed CPI creeping back up to 3.3%, confirming that price pressures are re‑accelerating rather than fading away since the outbreak of the war in Iran. Markets had already moved to price in a quarter‑point Bank of England rate hike by the end of the summer but this data could add to pressure on the MPC to act.
“A rise in rates risks misdiagnosing the problem. This inflationary pulse is being driven by supply disruption, not excess demand. Higher interest rates will do nothing to increase the flow of oil or other goods from the Middle East. Financial markets are behaving as though the conflict is effectively over, with equity markets largely recovered and oil prices for future delivery falling from around $95 for June contracts to closer to $80 by year end. The physical market tells a very different story. Prices for immediate delivery into Europe are trading roughly $28 above benchmark levels, reflecting transport disruption rather than longer‑term demand.
“Even if the conflict were to end quickly, today’s data underline that an inflationary effect already feeding through the economy and will continue to do so over the coming months. A rapid reopening of the Strait could allow current rate‑hike expectations to unwind, but whether this becomes something more persistent, and harder for markets to look through, depends entirely on how long supply chains remain impaired.
“The problem is that this inflation shock is landing as the domestic economy is weakening. Recent labour market data show payrolled employment falling, inactivity rising and wage growth easing. Rising prices alongside weakening earnings growth is a clear recipe for declining real purchasing power.
“A swift resolution to the conflict must be the priority, but today’s inflation numbers also highlight how little has changed since the last energy crisis. Greater energy self‑reliance remains essential, including increased production, generation and storage.
“In the short term, China’s decision to restart coal‑fired power generation has helped ease pressure by freeing up LNG cargoes for Europe. UK gas prices have fallen by around a third from their March peak, but they remain well above pre‑conflict levels, underlining how exposed the economy still is to decisions taken elsewhere.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“Today’s data was always going to show an energy price driven jump in headline inflation. The market will take some comfort that the increase in inflation was no greater than had been expected, while measures of underlying inflation were more mixed, with core softer but services inflation elevated. Inflation is set to rise further from here once the impact on household energy bills is felt after the Ofgem price cap re-set in July. Policymakers will be much more focussed on whether higher energy prices start to contaminate a broader range of prices. Certainly inflation expectations are likely to remain elevated, but with the labour market and broader economy relatively weak, it is hard to see workers and firms having much power to gain higher wages and push through higher prices in response. That should ultimately limit the size and extent of the coming inflation shock. For now, though, the Bank of England is likely to remain in wait-and-see mode, keeping policy on hold next week and maintaining maximum optionality about whether interest rates ultimately end up increasing or decreasing later this year.”
Kevin Brown, savings expert at Scottish Friendly, says:
“March’s data reflects the early impact of recent energy price increases, with further inflationary pressure from conflict in the Middle East still to filter through. For many UK households, this is an unwelcome development at an already difficult time.
“Scottish Friendly’s Family Finance Tracker research, conducted before the recent conflict in the Middle East, showed six in 10 people do not believe the cost-of-living crisis is over, while two-thirds remain concerned about affording their regular outgoings over the next 12 months. Inflation is rising again, and sadly its impact on households’ financial confidence is nothing new.
“For the Bank of England, an upward move in inflation would at the best of times reduce any likelihood of easing policy. A 3.3% reading today will only reinforce expectations that the BoE’s base rate will remain on hold next week.
“As inflation picks up again, the legacy of recent years’ price rises may also be reasserting itself. For savers, while cash still offers short-term stability, it is important to recognise that it can struggle to preserve real value in an environment where inflation is rising. For those looking to protect purchasing power, investing could potentially be the right long-term option.”
Harriet Guevara, Chief Savings Officer at Nottingham Building Society, said:
“March’s CPI figures show inflation has risen to 3.3%, reflecting the impact of geopolitical tensions on oil and commodity prices, which feed through into energy, fuel and food costs for households.
“For savers, this matters because it underlines why reviewing your savings options remains important. If inflation rises, it reinforces the need to ensure your money is keeping pace with price rises – whether that’s locking into fixed rates for certainty or choosing accessible accounts that offer competitive returns.
“The new tax year also brings a fresh £20,000 Cash ISA allowance, and it’s worth noting that this is the last full year to make full use of today’s limit before changes take effect from April 2027. For those prioritising tax efficient savings, it’s a timely reminder to review whether you’re maximising this allowance.
“Ultimately, inflation remains a key factor in savings decisions. Making sure your money is working hard enough to maintain its purchasing power, whether through fixed rates or accessible accounts, remains as important as ever.”
Mike Ambery, Retirement Savings Director at Standard Life plc, said:
“Today’s inflation figure of 3.3% suggests that price pressures are starting to pick up against the backdrop of war in the Middle East, with the initial impact of volatile wholesale energy markets starting to feed through. However, this is unlikely to show the full picture. Energy prices have continued to rise into April, and their impact on the UK energy price cap – due to be updated in July – as well as on everyday costs like transport, food and other essentials, is still working its way through.
“The Bank of England is likely to remain cautious ahead of its interest rate decision next week. It will be balancing concerns about inflation drifting back towards 2022 levels with the need to support economic growth and jobs. While recent figures showed the labour market was holding up better than expected before the conflict in the Middle East, with unemployment falling in the three months to February, the jobs market remains tight and further interest rate rises could increase the risk of tipping the economy towards recession. At the same time, policymakers will be watching developments in the Middle East closely, including whether there are signs of a lasting ceasefire, given the implications this could have for energy prices and inflation more broadly. Against that backdrop, the Bank is likely to want clearer evidence on whether this renewed inflationary pressure proves temporary or more built in before making any significant moves.
“For households and those planning for retirement, this uncertainty underlines the value of flexibility and long‑term thinking. Inflation can quietly erode spending power, particularly for those holding large amounts in cash. While cash savings remain important for day‑to‑day security and emergencies, having a longer‑term plan that aims to keep pace with – or outstrip – inflation, through investments and pensions, can help people stay on track for the future, even when the economic picture is unsettled.”
Derrick Dunne, CEO of YOU Asset Management, comments:
“These inflation figures are the biggest test for the Bank of England, and the Government, since 2022 when inflation last rocketed.
“The economic backdrop is far more uncertain now than it was in 2022, when the economy was rebounding from lockdowns, households had excess savings and the labour market was firmly in favour of workers. None of these things are now quite as sure.
“It is likely we’ll now see market expectations for a hike increase ahead of next week’s MPC decision. But it’s not that simple. This kind of inflation increase – driven by fuel cost rises – acts like a form of rate hike on households because it takes spending away from other areas. Simultaneously, wages are weakening again just as the labour market softens, taking bargaining power away from workers.
“With that in mind, to hike now might not be the right course of action especially given the weakness in the labour market, household and business resilience after four years of higher rates. Even holding rates, given cuts were pencilled in, might also be risky.
“The Government will now have to carefully consider its options when it comes to helping households most at risk from bill hikes and least able to weather further cost-of-living increases. Broad-based measures risk fuelling the inflation fire – making room for manoeuvre extremely tight.
“Anyone unsure what this could mean for their long-term financial plans should consider consulting with a financial planner.”
Isabel Albarran, Investment Officer at TrinityBridge says:
“Today’s inflation reading of 3.3% marks the first tangible impact of the Middle East conflict feeding through into headline prices, driven in part by the earlier uptick in energy costs seen in March. However, this is unlikely to be the full extent of the pressure. Energy markets continued to firm into April, and prices remain elevated despite some improvement in the diplomatic backdrop. Even if tensions continue to ease, global oil supply is expected to stay tight. There is a backlog of shipments to work through, alongside damage to key infrastructure, which will take time to resolve. As a result, oil prices may remain higher for longer, with knock-on effects for both inflation and economic activity.
“For the Bank of England, this creates a difficult balancing act. Policymakers must weigh the risk of inflation becoming more persistent against the need to support growth in the face of a negative supply shock. This decision is further complicated by February’s stronger-than-expected GDP data, as well as heightened political uncertainty linked to instability within the Labour Party.
“Market pricing has also shifted. Futures now point to one rate hike over the next 12 months in the UK, a moderation from the more aggressive expectations seen as recently as last week, and broadly consistent with our view that the Bank of England is likely to remain cautious and data-dependent.”
Emma Wall, Chief Investment Strategist, Hargreaves Lansdown:
“UK inflation increased to 3.3% as the impact of the Middle East conflict flowed through to fuel prices. This increased from 3% the previous month and was in line with analyst expectations. While the increase in prices will be felt keenly at the petrol pump, it is highly unlikely a single inflation print will be enough to sway policy makers into moving Bank of England base rate next week.
Inflation is likely to remain elevated in April too, and markets are now pricing in one rate rise later this year, but our house view is that rates are held through the conflict – returning to the expected rate cutting cycle later than forecast just a couple of months ago, but on path to neutral next year.”
Carrie Johnson, protection director at Royal London, said:
“The conflict in the Middle East has significantly altered the UK’s inflation outlook, reversing previous expectations of a return to the 2% target. While inflation was easing steadily from its peak of 11.1% in October 2022, a renewed surge in oil and gas prices is hitting household budgets again.
“And it’s not just inflation that’s squeezing take-home pay. The freeze on personal tax thresholds, and higher National Insurance contributions have all played a part in eating into disposable income and intensifying the cost-of-living. This has resulted in a fifth of adults admitting to financial challenges, including paying bills, managing debt, or coping with unexpected changes in income.
“Faced with climbing costs, families across the country are being forced to make tough financial decisions. The danger is that they compromise their future financial resilience and make a decision about their protection insurance that they may regret further down the line.
“It’s a challenge that many advisers are facing as clients look for ways to cut down their monthly expenditure. After all, protection insurance isn’t tangible, and they may have forgotten the compelling reasons that made them take it out in the first place. However, there are a number of angles that are worth discussing with clients thinking about cancelling their cover.”
Tim Grimsditch, Managing Director at Unbiased, said:
“Inflation increased by 3.3%, which will come as unwelcome news as it signals we’re moving further away from the 2% target and households will continue to feel financially stretched.
“With an estimated £2 trillion currently sitting in cash and low-interest savings accounts across the UK, this uptick is a significant concern. As inflation rises, the real-world value of these savings diminishes more rapidly, meaning money in the bank effectively buys less than it could before.
“To protect your long-term wealth, it is more important than ever that your money is proactively managed and well-invested. Relying on standard accounts in this economic market often means losing value in real terms, making it an uneasy time for those trying to build a financial safety net.
“If you’re unsure how these changes could affect your finances, it’s worth speaking to a professional financial adviser who can help you plan with confidence.”
Jeremy Batstone Carr, European Strategist, Raymond James Investment Services, said:
“Today’s eagerly awaited CPI inflation data brings with it the first official indication of the extent to which the conflict in the Middle East has manifested in higher energy prices. The UK produces more petrol than it uses but produces just 55% of the total diesel used domestically. Despite the UK’s relative insulation, average petrol and diesel prices increased sharply in March, directly contributing to a 0.3%-point increase in the headline rate of CPI inflation alone.
“The indirect impact of the energy price shock has led to an increase in food price inflation, owing primarily to higher prices for agricultural commodities. Overall, these high-profile price pressures resulted in headline inflation rising from 3.0% in February to 3.3% last month. Highly volatile airfare increases also proved an important, if subsidiary contributor given the early Easter.
“While opting to hold the base rate at 3.75% in a unanimous decision at its last Monetary Policy Committee meeting, the Bank of England indicated it stands ready to take appropriate action to curb inflationary pressures. While financial markets initially interpreted this hawkish shift as an indication that interest rates might be raised as soon as next week, it may still take several months for the anticipated rate hike to materialise.
“On this occasion, the Committee will surely take heart from the soft tone of the latest employment and wage growth data, paired with the still subdued core CPI inflation confirmed in today’s release. Whilst likely signalling that it is on guard against rising inflation expectations, there is still insufficient evidence of any knock-on second round effects in core price trends which would warrant an immediate policy adjustment.
“Committee members will, however, be all too aware of the fact that while April’s data will benefit from last year’s regulatory price increases dropping out of year-on-year comparisons, the favourable impact will be short-lived as utility regulator Ofgem is expected to materially raise its price cap in July and again in October. Given that pass-through price pressures can typically take a number of months to show up in the data, CPI inflation is not likely to peak before late this year, or longer if the conflict in the Persian Gulf is not resolved swiftly.”
Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said:
“The fading rate environment attitude at the start of the year has U-turned as fresh inflationshocks continue to shift base rate expectations. By Q3, inflation is expected to hit 3.5%. The last time it was around this figure there were 1,224 deals that could beat CPI but based on today’s rates there would be over 200 more*. The ‘higher for longer’ stance could temporarily push this number even higher, giving savers unrivalled choice, however, providers may not be able to maintain these competitive margins as markets remain volatile.
“During times of uncertainty, some savers may place higher value on flexibility. Easy access accounts can be useful to help manage monthly volatility, giving savers the freedom to respond to unexpected costs. Today the top easy access account edges ahead of even the top fixed bonds, on £10,000 that equates to a small £5 yearly advantage, but this can quickly grow on larger sums. However, savers not willing to bet on variable rates remaining elevated may be willing to sacrifice the higher rates for guaranteed returns.
“Savers face a tricky balancing act. While they may be able to enjoy more competitive returns in the short-term, inflation will quickly catch up, eroding their hard-earned cash. In any case it’s crucial savers shop around for deals that pay over 3.3% to ensure they aren’t left out of pocket.”
Susannah Streeter, chief investment strategist, Wealth Club, said:
”With a long-term resolution to the Iran war remaining elusive and the repercussions forcing up inflation in the UK, a downbeat mood is set to mark early trading.
The ceasefire extension hasn’t done much to calm nerves given that worries remain about the impact of the energy squeeze on the global economy. Shipments from the Middle East are in limbo and a resolution to the conflict remains elusive, and the price of Brent crude, the benchmark, reflects this. Although it’s dipped back slightly, it remains highly elevated, hovering just under $98 a barrel as the stalemate continues.
Iran has stressed it would not reopen the Strait of Hormuz while the US military continues intercepting tankers, while the US administration is showing no sign of changing tack. So with this crucial waterway still blocked, nerves are on edge about just how long it will take for critical supplies of oil and gas to flow out once more.
Consumers and companies are already dealing with the consequences, with prices at the pumps soaring and freight costs ratcheting up. It’s having an insidious effect on inflation, with prices rising more steeply in March, as the surge in energy prices began to seep across the economy.
The headline CPI rate jumped up from February’s 3% reading, reaching 3.3%, as higher fuel costs and renewed turbulence in global energy markets rippled through supply chains. These are the first flickers of the Middle East conflict heating up everyday costs, with volatile oil and gas market pricing hitting forecourts. There’s likely to be further flare-ups on the way, especially if a longer-term resolution isn’t agreed.
The renewed climb in fuel prices risks squeezing budgets just as some breathing room had begun to emerge. Shoppers have turned cautious, and it seems retailers have had to discount to shift stock, with prices for clothing and footwear declining sharply month on month. They dipped by 0.8% in the 12 months to March 2026 compared with a rise of 0.9% in the 12 months to February. It was the lowest recorded annual rate for March since 2021 when prices were hit by the COVID-19 pandemic. Clearly consumers are tightening their belts as another cost-of-living crisis arrives.
Every extra day the Strait of Hormuz remains closed, brings a fuel shortage crisis closer, with airlines scrambling to secure supplies. Fuel surcharges may become more prevalent, and holidaymakers are already bracing for potential cancellations as the busy summer period looms. Already air fares rose 10% in March, but this was mainly due to the timing of Easter, and there look set to be more war-induced price hikes to come.”
Adam Hoyes, Senior Asset Allocation Analyst at Rathbones, said:
“The increase in inflation in March captures the first effects of the conflict in the Middle East on UK households. While it may have temporarily reversed in April, inflation is still likely to be higher over the rest of 2026 than most expected at the start of the year. We think investors would be wise to take heed from recent events and prepare for a world of higher and more volatile inflation over the longer term.
“Headline UK CPI inflation reaccelerated in line with our expectations on the back of the Iran war, from 3.0% in February to 3.3% in March. The increase was, unsurprisingly, an energy price story. Energy inflation jumped from -1.0% in February to +4.9% in March, almost entirely due to higher prices at the pump.
“Fuel prices have risen further since the March data were collected. Weekly government data show the average price of petrol up around 12% in April relative to March, while diesel prices are almost 20% higher. That could add another 0.7 percentage points to headline inflation at the next data release, more than offsetting the downward pressure on inflation from the energy bill price cap, which was lowered by just under 7% in April. And the lower price cap is increasingly looking like it is only delaying the pain for households given that it is likely to rise again in July.
“To be sure, we think headline inflation will probably have eased back to around 3% again in April as hikes from this time last year in other ‘regulated’ prices, such as water bills, road tax, and rail fares drop out of the year-on-year calculation. But it’s worth recalling that before the conflict erupted many were expecting inflation to be much closer to the 2% target in April. The outlook has changed materially.
“One crumb of comfort for rate setters at the Bank of England will be that there were few signs of higher energy costs putting upward pressure on prices elsewhere in the economy yet. Core inflation, stripping out the volatility of energy and food prices, slowed slightly from 3.2% in February to 3.1% in March (despite a 10% spike in airfares caused by the timing of Easter). We expect these so-called ‘second-round effects’ to be weaker than after the energy price shock in 2022 given how different the economic backdrop is. With a much cooler labour market, workers don’t have the same bargaining power to demand higher wages. Monetary and fiscal policy are both much less supportive than they were back then too. All else equal, that means the Bank of England has a bit more breathing room to wait and consider its response.
“Even so, we saw little evidence from today’s data to allay our concerns about the persistence of services inflation, which preceded the war. One underlying measure we track that ignores the impact of ‘regulated’ and volatile services prices has essentially not budged for almost a year now, and remains materially above its long-run pre-pandemic average. At the margin, that will make policymakers more hesitant to resume interest rate cuts.
“The outlook for inflation and interest rates beyond April remains heavily dependent on developments in the Middle East and global energy markets. The latest change shift in the US position overnight highlights the difficulty of predicting how the situation will evolve with any certainty. For us, the main takeaway from recent events has been a stronger conviction in our long-held view that the world is likely to be a more unstable place, with inflation and interest rates higher and more volatile, than we became used to in the 2010s.”
Sarah Coles, head of personal finance at AJ Bell, comments:
“At this stage, inflation is fairly lumpy, with the pain felt most keenly at the pumps and for those using oil to heat their homes. However, over the coming months we can expect it to spread to the supermarket, the high street, our energy bills and beyond. In the interim, it’s a good idea to work some wiggle room into your finances, before you find yourself running out of money at the end of the month or forced to plan on the fly.
“The average price of petrol rose by 8.6 pence per litre in a month to 140.2 pence per litre, the highest price since August 2024. Meanwhile diesel prices rose by 17.6 pence per litre to 158.7 pence per litre, the highest since November 2023. The price of domestic heating oil also spiked when the Iran war started, up an astonishing 95.3% in a year – the highest since September 2022.
“Air fares also climbed 10% in a month. However, the figures were collected before the outbreak of war in the Middle East, and the rise came mainly from the timing of the collection, which fell on the Tuesday after Easter this year, affecting the price of long haul flights.
“Food prices will be one to watch in the months to come, with food and non-alcoholic drink prices up 3.7% in a year – from 3.3% a month earlier. These were powered by longer-term issues, increasing the price of chocolate, meat, fish and soft drinks, but if oil prices remain higher, we can expect it to start to affect the rest of the basket too.”
Richard Flax, Chief Investment Officer at Moneyfarm, comments:
“The latest UK inflation data confirms what had been widely anticipated – the conflict in the Middle East is now feeding directly into consumer prices. Headline CPI rose to 3.3% in March, up from 3% in February, driven almost entirely by a sharp increase in motor fuel costs, which recorded their largest monthly rise in over three years. While the headline figure was in line with consensus, the underlying dynamics are concerning, as the energy shock continues to ripple through the economy via higher transport costs, rising air fares, and, particularly, increased food prices.
There is some comfort in the fact that core inflation edged lower, from 3.2% to 3.1%, suggesting that underlying price pressures have not yet broadened significantly. However, the risk of second-round effects, through higher wages or business costs, remains real, particularly if energy prices stay elevated.
For investors, the key question is what this means for the Bank of England’s policy trajectory. Prior to the conflict, the path towards the 2% target appeared achievable, and further rate cuts seemed likely. That outlook has shifted materially. With inflation moving further above target and the prospect of additional increases in the coming months, the Bank faces a difficult balancing act between addressing inflation risks, coming from a supply shock, and supporting an economy that is already showing signs of strain. The next MPC meeting on 30 April will be closely watched, though a hold at 3.75% remains the most likely outcome for now.”
