Higher fuel prices drive up inflation in March

The impact of the war in Iran on fuel prices led to inflation going up slightly last month.

New figures show that inflation rose to 3.3% in March - up from 3% in February.

These are the first figures that reflect the impact of the US-Israel war in Iran, which has led to oil prices surging and fears of a renewed cost-of-living crisis.

Before the war, there were hopes that we were finally starting to turn a corner when it came to inflation.

But the conflict has changed the picture completely, and any previously hoped for interest rate cuts also look a bit further away.

Ultimately, the economic impact will depend largely on how long the war and issues with the global supply of oil continue.

So we’ll be keeping a close eye on what’s going on in the Middle East and here to let you know what it will mean for you and your money.

Why are fuel prices so high?

Iran blocked the Strait of Hormuz - a key shipping route for oil supplies - after US and Israeli airstrikes began at the end of February.

About one-fifth of the world’s oil supply passes through the Strait, so the blockage led to oil prices soaring - and that in turn, pushed up fuel prices.

In fact, the Office for National Statistics (ONS) says fuel prices saw their largest increase for over three years last month, while air fares and food prices also went up.

Keeping costs down is top priority, says chancellor

Responding to the figures, chancellor Rachel Reeves said: “This is not our war, but it is pushing up bills for families and businesses”.

She stressed that keeping costs down is her “number one priority” and pointed to measures she has taken such as cutting energy bills by £117, freezing rail fares and extending the 5p fuel duty cut.

"We’re acting to protect people from unfair price rises if they occur, to bring down food prices at the till, and are boosting long-term energy security,” Reeves added.

What is inflation?

When we talk about inflation, we’re talking about how fast prices are going up.

So if inflation rises, your money buys less than it did before.

And while you might think a fall in inflation means the opposite, that’s not actually the case.

Instead, it means prices are still going up, but more slowly than before.

The ONS measures inflation by comparing the prices of an imaginary shopping basket each month, containing basics like bread and milk, as well as bigger purchases like cars and televisions.

The headline inflation figure shows us how much the price of what’s in the basket has changed.

What can I do if I’m worried about rising costs?

If you’re struggling with the increasing cost of living, there are a few practical steps you can take.

Use our household bills calculator

Our free and interactive household bills calculator gives you a personalised forecast of how your monthly costs could change.

That means you can see the bigger picture more easily and that there’ll be no surprises when new bills arrive.

It only takes a couple of minutes to use, and the results are tailored to where you live.

Get on top of your budget

Make sure you know how much money you’ve got coming in and where it’s going.

Taking a proper look at your income and expenses can help you prioritise your spending, so you know you’ve got money available for vital costs like bills.

Check out our guide to how to create a budget to get started.

And give our budget planner a try - it’s free and easy to use.

Check what benefits you can claim 

You might be eligible for financial support to help you with your living costs.

Use our benefits calculator to see what you could be entitled to claim. 

It’s possible that you’re eligible for more help than you think.

Get help with your debts

If you’re feeling the pressure of debt, contact us for confidential, practical and impartial debt advice.

Check our regular money saving tips

We’re always here with handy advice on how you can save money.

For example, we’ve got useful tips on how to keep the cost of your food shop down, how to save energy and how to cut your fuel costs, as well as regular updates on standout deals and low-cost recipes.

Check back here regularly for more hints and hacks that could make a big difference to your finances.