UK inflation rose to 3.3% in March, up from 3% in February, as higher fuel costs and renewed volatility in global energy markets pushed prices upwards, according to the latest data from the Office for National Statistics (ONS).
The increase was largely driven by a sharp rise in fuel prices, alongside higher airfares and food costs, signalling the early impact of global geopolitical tensions on everyday expenses.
ONS Chief Economist Grant Fitzner said: “Inflation climbed in March, largely due to increased fuel prices, which saw their largest increase for over three years.
“Airfares were another upward driver this month, alongside rising food prices.
“The only significant offset came from clothing costs, where prices rose by less than this time last year.
“The monthly cost of both raw materials for businesses and goods leaving factories rose substantially, driven by higher crude oil and petrol prices.”
According to the ONS, while core inflation showed mixed signals, the broader trend reflects growing cost pressures filtering through supply chains, particularly from energy markets.
Economists say the rise had been widely anticipated. Luke Bartholomew, Deputy Chief Economist at Aberdeen, noted that the increase was “no greater than had been expected”, but warned that further rises are likely.
“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,” he said.
“Policymakers will be much more focussed on whether higher energy prices start to contaminate a broader range of prices.”
He added that despite elevated inflation expectations, weaker labour market conditions may limit how far wages and prices can rise, suggesting the Bank of England is likely to remain cautious.
“For now, the Bank of England is likely to remain in wait-and-see mode, keeping policy on hold… and maintaining maximum optionality about whether interest rates ultimately end up increasing or decreasing later this year.”
The inflation outlook is also being shaped by global events, particularly ongoing tensions in the Middle East. Disruption to oil and gas supplies has pushed up wholesale energy prices, feeding through to transport, manufacturing and retail costs.
Susannah Streeter, chief investment strategist at Wealth Club, said the situation is already having an “insidious effect” on inflation.
“The headline CPI rate jumped… as higher fuel costs and renewed turbulence in global energy markets rippled through supply chains,” she said.
“With the Strait of Hormuz 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.”
She added that consumers are beginning to feel the strain again, with rising petrol prices and increasing freight costs squeezing household budgets. Retailers have responded with discounting, particularly in clothing, where prices fell by 0.8% annually in March.
Food inflation is also expected to climb in the coming months. Dr Liliana Danila, Chief Economist at the Food and Drink Federation, warned that the full impact of rising costs has yet to reach consumers.
“The clouds are gathering, but the storm has not yet broken on rising food and drink inflation,” she said.
“The impact on prices will take time to work its way through the system… but it’s only a matter of time before it does.”
She added that, without intervention, food inflation could reach 9–10% by the end of the year, as manufacturers gradually pass on higher costs.
Meanwhile, wage data released alongside the inflation figures points to a cooling labour market, adding another layer of complexity for policymakers.
Kevin Brown, savings expert at Scottish Friendly, said: “Falling wage growth… will be welcomed by the Bank of England, especially at a time when global energy costs are rising.
“That said, today’s news will do little to alter the course of interest rates. The broader environment remains too uncertain.”
He warned that continued geopolitical tensions could weaken the jobs market further, potentially increasing unemployment and complicating the path for interest rates.
