While a conditional ceasefire is currently in place in the Middle East, this doesn’t mean prices will be falling any time soon.
The conflict in the Middle East has had a huge impact on prices in the UK.(Image: Getty Images)
While many Brits may have already been struggling with fluctuating prices that have a direct impact on daily life, the conflict in the Middle East has caused a variety of prices to skyrocket which has essentially hit a variety of people while they were already down.
And sadly it doesn’t look like it will be getting better any time soon, even if the current two-week ceasefire between Iran and the United States does hold. While many of us hold our breath as peace talks are currently scheduled for this weekend in Pakistan, there are very few of us that believe it will be a success.
While the conflict has been taking place thousands of miles away, it has still had a direct impact on the UK. With the Strait of Hormuz being closed for a period of time, fuel prices have been seen to skyrocket. This closure caused significant damage as the Strait sees a fifth of the world’s oil pass through it each year.
According to recent data from RAC, the cost of petrol and diesel is the highest it has been in three years, with some motorway service stations advertising prices as high as £2 per litre. And while the Strait is currently open for the time being, fuel prices are not set to drop for another couple of weeks.
The same can also be said for the prices of other products in the UK, with Brits most likely to still be hit with increased cost for a little while longer, reports the Mirror. Sadly this is true no matter the outcome of the upcoming negotiations.
Along with the fuel prices soaring, Brits are expected to be hit with hikes in energy bills this summer as a result of the war, with warnings of food inflation if the conflict continues.
Fuel
Motoring experts currently have mixed opinions on when fuel prices are likely to drop. However, they all agree it is conditional on the ceasefire holding.
According to today’s data from the RAC Fuel Watch (April 10), the average price of diesel in the UK is sitting at 191.31p per litre, while the average cost of petrol is 158.61p. At the moment the RAC is reporting ‘no change forecast’, but this could go either way in the coming days.
While the RAC is telling drivers to not expect significantly cheaper fuel in the short term, a spokesperson from the AA said: “Based on the fuel industry’s rule of thumb of a 10 to 14-day lag between wholesale cost movements and those at the pump, drivers should expect prices on forecourts to level by next weekend and then fall – providing the ceasefire holds.”
Meanwhile Rachel Winter, from the wealth management company Killik & Co, told BBC Radio 4’s Today programme: “I would expect it to take at least a few weeks, if not a few months.”
Energy
Unfortunately, the war is set to cause a hike in energy bills this summer. For a typical home this July, analysts at Cornwall Insight are currently expecting the Ofgem price cap to jump up to £1,929. This is a huge rise from its initial price of £1,641.
The price cap for July cannot be officially confirmed at the moment as it will be based on the wholesale prices between February 18 and May 18, 2026. While predictions will likely change closer to the time, some energy companies have already started pulling their fixed tariffs as a result of the conflict.
Last night, consumer expert Martin Lewis shared a message on social media urging Brits to look at new energy fixes as they are currently cheaper than the April price cap. However, these are expected to disappear fast.
He said: “Urgent. For the first time in weeks, due to the ceasefire, there are a couple of energy fixes cheaper than the new April price cap. If things change they could disappear at speed. If you’re on the cap and want to avoid the big hike in July, this does that. Do a whole of market comparison.”
Holidays
Rising fuel prices are also having an impact on holidays. Last week the global average jet fuel price was seen to rise to $209 per barrel, which is 7.1 per cent higher in comparison to the week before.
Additionally, the conflict also forced some airlines to cancel their flights or introduce longer travel routes in order to avoid conflict zones. This increased time in the air will also raise the price of air travel.
While British Airways owner IAG and Easyjet have said they bought their fuel before the conflict began, thus not having to raise prices, Ryanair’s boss Michael O’Leary warned last week that jet fuel supplies could be disrupted in May if the war continues.
Food
The cost of transporting goods has also become more expensive due to the rising fuel prices. Additionally, the closure of the Strait of Hormuz has caused the price of fertilizer to spike, which is used to help grow fruit and vegetables.
As these costs are normally included in the customer price, the Food and Drink Federation (FDF) has already increased its food inflation forecast for the year. Earlier this month it even warned food inflation could jump higher than 9 per cent by the end of the year if the conflict carries on.
Dr Liliana Danila, FDF chief economist, said: “As one of the UK’s energy intensive industries, manufacturers are facing mounting energy bills, rising transport and packaging costs and disruption across key supply chains. These pressures are hitting simultaneously, and are a significant challenge for businesses to absorb.”
Mortgages
Mortgages rates have also been seen to increase. According to Moneyfacts, the average mortgage rate at the moment is 5.90 per cent for a two-year fix and 5.78 per cent for a five-year-fix. While these rates are nearing their peak, Moneyfacts warns it is “too soon” to say whether things will start looking better for borrowers.
Swap rates have also been rising in recent weeks, which are used by lenders to price mortgages. Rachel Springall, finance expert at Moneyfacts, said: “Over the past few days, we have seen a couple of lenders cut fixed mortgage rates, but it’s a bit too soon to say whether this is the turning point for borrowers overall.”
Medicines
According to the National Pharmacy Association (NPA), pharmacists have seen “evidence of escalating price rises” for medicines. However, it did add the UK is “yet to see” any medicine shortages directly linked to the war.
Chief executive Dr Leyla Hannbeck said: “The UK pharmacy sector depends heavily on imports, particularly from India and China, and ongoing pressures, from rising energy costs to constrained raw ingredients from the Middle East conflict, are already disrupting supply and risk worsening shortages without decisive action.”
