Inflation in the United Kingdom (U.K.) jumped to an annualized 3.3% in March as the Iran war drove a sharp increase in fuel prices.
Data from the Office for National Statistics (ONS) showed that fuel prices saw their largest increase in over three years during March as the Iran war disrupted the crude oil market.
Economists polled by Reuters (TRI) had expected the U.K. inflation rate to accelerate to 3.3%, up from 3% in February, matching expectations.
Airfares also rose sharply as did food prices during March. The only significant offset came from clothing costs, where prices rose less than a year ago.
As a net importer of energy, the U.K. is vulnerable to global energy price shocks like the one caused by the war between Iran and the U.S. and Israel.
Before the Iran war began on Feb.28, the Bank of England was expected to cut interest rates as inflation was nearing its 2% annualized target.
Now, economists say the central bank could increase rates in coming months as inflation marches higher across the U.K.
The most recent poll of economists found that a majority expect the Bank of England to keep interest rates unchanged for the rest of this year as policymakers look past the spike in inflation and take a longer-term view.
All eyes remain on developments in the Middle East, with U.S. President Donald Trump indefinitely extending a fragile ceasefire between America and Iran.
