INFLATION is on the rise again, with higher fuel prices due to the war in the Middle East driving the Consumer Prices Index (CPI) up to 3.3% in the 12 months to March 2026, from 3.0% in the 12 months to February.
Experts said the uptick in prices was “unwelcome but not surprising”, and warned the Bank of England may be unable to “ignore the data if this continues”. One described the 90.5% rise in the cost of domestic heating oil in March as “a financial hammer blow”.
On a monthly basis, CPI rose by 0.7% in March 2026, compared with a rise of 0.3% in March 2025. Motor fuels made the largest upward contribution to the monthly change in both CPIH and CPI annual rates, while clothing made the largest, partially offsetting, downward contribution.
Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.1% in the 12 months to March 2026, down from 3.2% in the 12 months to February; the CPI goods annual rate rose from 1.6% to 2.1%, while the CPI services annual rate rose from 4.3% to 4.5%.
Meanwhile, the 12-month rate for housing and household services was 4.3% in March 2026, up slightly from 4.2% in February. Prices rose by 0.4% in the month to March 2026, compared with 0.2% a year ago.
The increase in the rate resulted from large price rises for domestic heating oil. Prices increased by 90.5% in March this year, compared with a fall of 7.5% a year ago. This resulted in a 12-month rate of 95.3%, the highest since September 2022.
Fuel prices
Grant Fitzner, Chief Economist, ONS, 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.”
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, thanked Trump for inflation ticking up and said it could soon get worse: “This rise in inflation is the tip of the iceberg thanks to the Trump tax that we are all having to pay. With oil still elevated and yo-yoing it won’t be long before the other factors that feed into the inflation number start rising.
“The Bank of England will be very wary to be the first to hike rates but they can’t ignore the data if this continues. We knew it was coming but it doesn’t make it any easier.”
Fragile economy
But Craig Fish, Director at London-based Lodestone Mortgages, believes Threadneedle Street will hold despite prices rising: “The jump from 3.0% to 3.3% CPI is unwelcome but not surprising.
“Energy prices have been feeding through from the Middle East conflict for some time now, but I do not think the Bank of England hikes on April 30th as the economy is too fragile.
“This inflation is being driven by external forces, not by wages running away or domestic demand overheating. Raising rates to fight an energy price spike is a bit like taking painkillers for someone else’s headache. I expect a hold, with language that keeps the door open but signals patience.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, said the ongoing conflict is causing hesitation in the property market: “The effect of the Middle East conflict has officially hit the finances of the UK.
“Of course, mortgage rates reacted well before these inflation figures, so no immediate changes are expected as a result of today’s announcement, and with oil prices dropping through the ceasefire, rates have levelled off or reduced a little already.
“The fear and concern of property buyers will continue to subdue the market and sellers also need to adjust their expectations for the next few months.”
Absurd
Ranald Mitchell, Director at Norwich-based Charwin Mortgages, zoomed in on the 90.5% rise in domestic heating oil in March: “The real shocker is heating oil. For that cost to almost double in such a short period is absurd.
“For families who rely on it, this is not an abstract inflation number, it is a financial hammer blow. At times like this, the Government should be asking how to give working Britain some tax relief, not just sitting back while soaring prices swell the Treasury’s take.”
Chaos
Daniel Hobbs, CEO at Rayleigh-based New Leaf Distribution, said the whole economy is now in a different place: “It was only a couple of months or so ago that the Bank of England was predicting inflation would be back at around target in the spring. The UK economy is now facing an entirely different scenario.”
Michelle Lawson, Director at Fareham-based Lawson Financial, said the data was unsurprising: “No real surprise here with the global carnage due to events in the Middle East resulting in financial chaos.
“The International Monetary Fund has already told nations to hold off on raising interest rates with a knee jerk reaction so it will be interesting to see if Threadneedle Street can hold its nerve.”
