The impact of “Trumpflation” is expected to hit UK households with a minimum annual cost increase of £1,600, according to experts.
The ongoing conflict between US President Donald Trump and Israel against Iran has already led to rises in fuel and new mortgage prices.
Energy suppliers are now cautioning that gas and electricity costs could surge by £250 per year due to a spike in wholesale prices. Additionally, airfares and retail prices are also on the rise.
TUC General Secretary Paul Nowak has expressed concerns, stating that the conflict and resulting chaos pose a threat to living standards, potentially necessitating further support to combat “Trumpflation.”
The potential support needed includes assistance with energy bills. While most households are currently protected by Ofgem’s price cap, which will decrease by 7% from April 1, there are fears about what will happen when the cap is adjusted in July.
Energy UK has warned that households could face a £250 increase in their annual energy bills by the end of 2026, bringing the average cost to £1,891. The organization is urging the government to promptly target assistance towards those most in need.
Dhara Vyas, Energy UK’s chief executive, emphasized the importance of preparing for any impact on British energy bills resulting from the Middle East conflict and ensuring that interventions are cost-effective and targeted at those most vulnerable.
The End Fuel Poverty Coalition estimates that around 13 million households may end up spending over 10% of their income on energy, with the poorest five million households facing even greater financial strain.
Simon Francis, the coalition’s coordinator, highlighted the risk of a surge in fuel poverty driven by the oil and gas price crisis triggered by the conflict in the Middle East.
Moreover, Age UK’s research indicates that over a quarter of pensioners were already facing financial difficulties before the Iran conflict, with energy costs being a primary concern. The escalation in oil prices due to Iran’s attacks on energy infrastructure has compounded the situation.
The recent surge in fuel prices is impacting millions of UK motorists, with diesel prices rising by nearly 20p per litre and petrol prices also increasing. This has added significant costs for regular commuters and drivers, potentially leading to higher monthly and yearly expenses.
The mortgage market has also been affected by the conflict, with fixed-rate mortgage costs rising sharply due to expectations of increased inflation from escalating energy prices. The Bank of England is anticipated to maintain its base rate, which was previously expected to decrease before the conflict.
Moneyfacts reports a significant increase in fixed-rate mortgage rates, with the average two-year fix rising to 5.28% and the average five-year fix to 5.32%. The reduction in mortgage product availability since the conflict began has further exacerbated the situation.
Borrowers are advised to brace for potential volatility as the global economy faces the impact of “Trumpflation” resulting from actions in Iran led by the US and Israel.
When considering the combined impact of rising diesel prices, mortgage costs, and projected energy increases, a typical household could face an additional £1,600 in expenses over the next year. This figure could increase to £1,827 for diesel drivers and £1,308 for petrol drivers if prices continue to rise.
There are concerns about potential increases in other costs for families, including airfare hikes, shifts in holiday destinations, and the impact on food prices due to disruptions in key trade routes.
Economists predict that inflation may reach around 3.5% by the end of the year and could rise further if there is an extended disruption in the Strait of Hormuz, which currently stands at 3%.
These developments underscore the need for households to prepare for potential financial challenges in the coming months as they navigate the economic repercussions of the ongoing conflict.
