The conflict between Iran, the United States and Israel is expected to push up living costs in the United Kingdom, despite the fighting taking place thousands of miles away. Energy suppliers say wholesale gas prices have surged amid disruption in the Middle East, leading to higher fixed energy tariffs and fewer deals on the market. Analysts warn that household energy bills, which are due to fall in April, could rise again by around 10 per cent from July if elevated gas prices persist.

Rising energy costs are also feeding into financial markets, increasing mortgage rates and reducing expectations of imminent interest rate cuts. The National Institute of Economic and Social Research has warned that if oil and gas prices remain high for a prolonged period, inflation could climb and interest rates could rise above 4 per cent, adding pressure to borrowers. Several major lenders have already increased mortgage rates in response to higher market expectations of inflation.

Fuel prices are expected to increase as higher oil prices filter through to petrol stations, while supermarkets could face rising transport, fertiliser and supply chain costs. Disruption to shipping routes and production in the Gulf region may lead to shortages or higher prices for products such as nuts, dried fruit and seafood, though some redirected meat exports could temporarily lower prices in Europe.

Holidaymakers may also be affected, with jet fuel prices hitting a four year high and analysts warning of potential flight disruptions if supply problems worsen. Although government officials insist energy supplies remain secure, experts caution that prolonged instability in the Middle East could continue to strain household budgets for months.