UK inflation held steady at 3% in February, marking the final reading before Middle East tensions escalated. Core inflation rose to 3.2%, driven by clothing prices, while petrol costs fell ahead of the Iran conflict. However, economists warn this calm is misleading. The subsequent blockade of the Strait of Hormuz has sent global energy prices soaring, and the UK faces particular vulnerability due to its heavy reliance on oil and gas imports combined with limited storage capacity. Deutsche Bank and other analysts predict a significant inflation surge in coming months if the conflict persists. While April may see slight relief from government energy bill cuts, consumer prices are broadly expected to rise substantially thereafter, creating serious headwinds for both households and businesses navigating an already challenging economic environment.
