Warning costs could soar further as Iran conflict sends UK prices higher than the EU
Costs could continue to rise as the conflect in the Middle East continues, a UK government minister has warned.
Households could be hit with soaring prices because of the war in Iran until eight months after the conflict has ended, a senior minister has warned.
The caution came as new figures revealed UK costs are almost a third higher than the EU average, leading critics to accuse Sir Keir Starmer of having “failed to lift a finger to support households across Scotland”.
The fresh data, from the House of Commons Library, also revealed the UK has endured the third-worst cost-of-living-crisis of the 37 countries analysed.
The closure of the Strait of Hormuz, a key shipping lane that once carried a fifth of global oil and gas, has sent oil prices soaring since the US-Israeli war on Iran began.
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The UK Labour government has urged drivers to keep filling up their cars as usual as higher prices hit petrol pumps and not to change their travel plans amid fears over potential jet fuel shortages.
Chief Secretary to the Prime Minister, Darren Jones, said the conflict is likely to continue to raise prices for energy, food and flight tickets in the coming months, as potential issues around energy supplies affect production, rather than lead to shortages on supermarket shelves.
“You’re going to see prices go up a bit as a consequence of what Donald Trump has done in the Middle East,” he said.
“That’s probably going to come online not just in the next few weeks, but the next few months. There’s going to be a long tail from this.”
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Asked how long higher prices might remain, he suggested it would be around eight months after the Strait of Hormuz is unblocked and a de-escalation of the conflict takes place.
“I think our best guess is eight-plus months from the point of resolution that you’ll see economic impacts coming through the system,” Mr Jones said.
Mr Trump announced an indefinite extension of the US ceasefire with Iran last week that paused most fighting. But further efforts towards ending the conflict have fallen flat after the US president told his envoys not to travel to Pakistan for talks at the weekend.
The UK government is stepping up planning for how to offset the impact and focusing on the live monitoring of stock levels and plans for addressing supply chain disruption.
Mr Jones told the BBC: “The government here in the UK, the work that I’m doing with the Prime Minister is looking at all of those things and saying, ‘What can we do within our power to help people to get through those difficult times?’”
The Labour government is seeking to secure stocks of carbon dioxide (CO2), which is used in the food industry and by breweries to make drinks fizzy as well as for defence purposes and medical uses such as MRI scanning.
Mr Jones said he is seeking to make sure there is an adequate supply of beer during the World Cup.
UK airlines have insisted they are not currently seeing a shortage of jet fuel as they buy it in advance and airports maintain stocks, but the government has said it is “closely monitoring” stocks.
Supermarkets have said they are working with the UK government to help plan for a worst-case scenario which could see the ongoing war lead to shortages of carbon dioxide used by food producers.
The warnings came as the House of Commons Library released analysis of data from Eurostat, the EU’s statistical agency, which gives a comparison of prices faced by households in different countries.
The latest data showing figures for each year from 2013 to 2024, the most recently available, compares a country’s price level with the EU average for each year.
With the EU average set to 100 in each year, the UK in 2024 has a value of 128.4 which means the average price level in the UK is around 28 per cent higher than the EU average.
The SNP has proposed controversial plans to cap the price of a basket of essential supermarket goods, but would need the permission of Westminster for the policy to proceed.
SNP candidate for Dundee City East Stephen Gethins said: “The Westminster-made cost of living crisis has hit Scottish households hard with prices far higher in the UK than in the EU.
“Scottish families are paying the highest price for a broken Brexit Britain in terminal decline where Keir Starmer has failed to lift a finger to support households across Scotland.”
Scottish Labour economy spokesperson Daniel Johnson said: “Despite being in government for nearly 20 years, the SNP still refuses to take responsibility for its role in the cost of living crisis.
“John Swinney and the SNP are responsible for the housing emergency piling pressure on families, the NHS crisis forcing record numbers of Scots to go private, and the low-growth, low-pay economy that is making it so hard for working people to make ends meet.”
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