Rising energy, fuel and food costs as Gulf conflict hits UK shoppers

Martin Lewis has urged bill-payers to get off the Energy Price Cap tarifs ‘urgently’ as fixed deals are being taken off the market.

From energy bills to pensions, here’s what experts say could be affected.

1. Gas and oil prices are rising

The conflict threatens supply routes, particularly the Strait of Hormuz, used by tankers carrying roughly one-fifth of the world’s oil and seaborne gas. QatarEnergy has also halted some liquefied natural gas production after attacks on facilities.

David Aikman, director at the National Institute of Economic and Social Research, warns:
“If it persists, it will raise household bills and business costs in the months ahead, putting renewed upward pressure on inflation.”

2. UK energy bills could increase

Although the UK imports energy from multiple regions, disruption in the Middle East could push gas and electricity prices higher, feeding through to heating and power costs.

Kathleen Brooks, research director at XTB, notes: “Europe is much less reliant on gas from Russia and the Middle East… markets could absorb a few weeks of disruption to Qatari LNG flow.”

3. Petrol and diesel could get pricier

Drivers may see gradual pump price increases. AA president Edmund King says prices will “inevitably increase” in the coming weeks, though wholesale rises take time to appear at pumps. RAC policy head Simon Williams adds:
“The oil price would have to rise significantly and stay that way for some time to have a dramatic effect.”

4. Shop prices could rise

Simon Geale, EVP at Proxima, explains: “Even though the UK doesn’t source much food from the Gulf, global supply chains are energy intensive. Fuel and fertiliser costs will push up prices for bread, pasta, cereals, potatoes, and animal feed. Food inflation could rise from 3.5–4% to around 4.5–5%.”

Rerouting shipments during disruptions has previously increased transport costs by 30–60%, which flows through to consumers.

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5. Interest rates and mortgages may be affected

Sanjay Raja, chief UK economist at Deutsche Bank, explains:
“Should energy prices stick at current levels, rate cuts would slow. A March rate cut could be in doubt, leaving inflation expectations stickier.”
Lenders may also reassess risk appetites due to wider economic uncertainty.

6. Pension funds could fluctuate

Maike Currie, VP of personal finance at PensionBee, reassures: “Pensions are long-term investments spanning decades… diversified funds limit the impact of shocks to one market.”

7. Investor portfolios could face volatility

Joe Wiggins, investment research director at St James’s Place, says global events can trigger short-term market swings. He advises investors to ensure their portfolios remain diversified and aligned with long-term goals.