UK Government will 'get ahead' of price rises caused by Middle East conflict as inflation rise looms

The Prime Minister said he is “working with others to mitigate the risk” of the “likely impact” on households and businesses amid a warning that the inflation is set to rise as the conflict intensifies.

He also acknowledged people’s concerns about the threat of rising bills in the wake of the US-Israeli assault on Iran and Tehran’s reprisals against countries across the region.

Meanwhile, Defence Secretary John Healey confirmed in the House of Commons tonight (Monday) the destroyer HMS Dragon would set sail for the eastern Mediterranean “in the next couple of days”, where it would join US air defence vessels

The SNP has urged the UK Government to provide an emergency cost-of-living support package as fuel and food prices are expected to increase, with the price of oil hitting more than $100 a barrel for the first time since 2022.

.At a community centre in London, Sir Keir said: “People will sense, you will sense I think, that the longer this goes on, the more likely the potential for an impact on our economy, impact into the lives and households of everybody and every business.

“And our job is to get ahead of that, to look around the corner, assess the risk, monitor the risks, and work with others in relation to that.”

Sir Keir said there was “more resilience” in the UK economy and the public finances than there had been at the time of the energy price shock triggered by the invasion of Ukraine.

He said: “I do understand the anxiety now, at nine days into this conflict, where a number of people will be saying ‘well, now is the situation going to get worse, and how’s it going to impact me and my family?’

“At the moment, what we’re doing is monitoring the risk, working with others to mitigate the risk.

“The Chancellor is talking to the Bank of England every day to make sure that we’re ahead of that.”

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He said the energy cap would protect households from the impact of turbulence in the markets “but of course, businesses and others will be concerned to watch carefully what’s going on”.

Asked if Mr Trump was risking a world war with his actions, Sir Keir said: “We do need to find a way to de-escalate the situation and that’s what a lot of our discussions are about – how do we find a way to de-escalate this situation and make sure it doesn’t escalate even further than it already has.”

Most UK households will be protected from the impact of rising energy prices in the short-term by the energy price cap.

But rising oil prices will feed through to higher costs at petrol stations.

And the risk of high energy costs pushing up inflation means the Bank of England is now unlikely to cut interest rates this month, as had previously been expected.

Chancellor Rachel Reeves warned warned that the conflict in Iran is “likely to put upward pressure on inflation” over the coming months.

She told MPs in the Commons: “I am clear eyed about my response to the current situation. My economic approach will both be responsive to a changing world and responsible in the national interest.

“The economic impact of the situation in the Middle East will depend, of course, on its severity and its duration. The movements that we have already seen are likely to put upward pressure on inflation in the coming months.”

SNP Westminster leader Stephen Flynn urged the Government to scrap its planned fuel duty hike this autumn, and to ensure the energy price cap does not have to rise because of the turmoil in the Middle East.

He urged Sir Keir and Chancellor Rachel Reeves not to be “commentators on this growing crisis”.

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The Aberdeen South MP said: “People are already struggling to get by, and afford a decent standard of living, in Brexit Britain.

“Many families are at breaking point and simply can’t take any more – in a broken UK economy where bills always rise and nothing ever seems to improve.

“The Labour Government must intervene and deliver an emergency package of financial support to help families and put money back in people’s pockets.

“Energy bills are already higher than when Keir Starmer came to power and they will be £373 higher than promised from April. The price of petrol and food is sky-high, inflation has increased by 50%, and people are struggling to keep a roof over their heads.

“Keir Starmer must cancel the Labour Party’s plan to hike fuel duty by 5p per pound, and instead slash rates if the cost of petrol and heating oil remains high.

“If energy bills look like they are going to rise again this summer and winter, Starmer must deliver UK Government subsidies to ensure the Energy Price Cap either continues to fall or, at minimum, does not rise one penny.

“And the Prime Minister must do everything possible to reduce mortgage interest rates and food prices.

“Keir Starmer promised voters he would reduce the cost of living – but energy bills are up, inflation is up, food prices are up, and unemployment is up.

“The Prime Minister and Chancellor cannot just be commentators on this growing crisis – and the Labour Party will not be forgiven if it stands by and allows another punishing hike in costs, which will hammer families.”

As the conflict intensifies, Mr Healey also confirmed in the House of Commons that RAF jets had shot down two further drones overnight, one over Jordan and another heading for Bahrain, while fragments of a drone that struck the UK base at Akrotiri, Cyprus, were being examined for “foreign military equipment”.

Downing Street poured cold water on speculation that one of Britain’s aircraft carriers, HMS Prince of Wales, had been moved to advanced readiness for deployment to the eastern Mediterranean. The ship, part of the UK’s carrier strike group, has previously been earmarked for deployment in the Arctic.