LONDON – The economic fallout from the Middle East conflict intensified on April 22, 2026, as the United Kingdom's inflation rate rose to 3.3% in March, primarily driven by a sharp increase in fuel prices. This surge in inflation, up from 3% in February, marks the highest reading in three months and is largely attributed to the closure of the Strait of Hormuz, a critical waterway for global oil and liquefied natural gas supplies.
Oil prices continued their upward trend, with Brent crude futures trading above $100 a barrel, erasing earlier losses following reports of gunfire attacks on at least three container ships in the Strait of Hormuz. Brent crude futures were up $1.59, or 1.6%, at $100.07 a barrel at 0842 GMT, while West Texas Intermediate futures rose $1.51, or 1.7%, to $91.18. Both benchmark contracts had already seen a roughly 3% increase on Tuesday. The closure of the Strait of Hormuz, a retaliatory measure by Iran following US-Israeli actions and a US blockade of Iranian ports, has severely throttled energy supplies.
European Union Energy Commissioner Dan Jorgensen issued a stark warning regarding the longevity of the energy crisis, stating that it could last for months or even years, even if peace were to be achieved. Jorgensen, speaking at a briefing unveiling emergency measures to address the crisis, compared the current situation to the combined severity of the 1973 and 2022 energy crises. He also confirmed the prospect of an aviation crisis, with a potential shortage in jet fuel hitting holiday and business flights within the next five to six weeks. The EU imports 30% to 40% of its jet fuel needs, with approximately half originating from the Middle East.
The escalating conflict's economic implications for the UK are significant. The International Monetary Fund (IMF) had previously warned that the Middle East war could wipe out 75% of the UK Chancellor's budget headroom. The IMF also projected that the UK would be the worst-hit major economy from the Iran war, downgrading its GDP growth forecast for 2026 to 0.8% from an earlier prediction of 1.3%. This half-percentage-point downgrade is the largest for any advanced economy. UK Chancellor Rachel Reeves has acknowledged that while this is not the UK's war, it is driving up costs for British households and businesses.
Beyond fuel, the Office for National Statistics (ONS) reported that airfares were another upward driver of inflation in March, alongside rising food prices. Food price inflation climbed from 3.3% to 3.7%, with the Food and Drink Federation predicting a potential rise to 9% by December due to the impact of the Strait of Hormuz closure on global fertilizer supplies. Core inflation, which excludes volatile energy, food, alcohol, and tobacco, eased slightly to 3.1% from 3.2% in February, while services inflation, a key metric for the Bank of England, edged up from 4.3% to 4.5%.