The war between Israel, the US and Iran added three tenths of a point to UK inflation in a single month as pump prices spiked. Four months on, headline CPI is lower than before the conflict began, even though the Bank of England's own forecast still expects a renewed rise this autumn.
On 28 February 2026, Israel and the United States began a campaign of strikes against Iran, which struck back at Israeli, US and regional targets, including energy infrastructure. The fighting effectively closed the Strait of Hormuz — a route for roughly a quarter of the world's seaborne oil — and sent global energy prices sharply higher.1 UK inflation had been essentially flat going into the shock: the Consumer Prices Index rose 3.0% in the year to February 2026, a reading the ONS notes was collected entirely before the fighting began.2
A month later, CPI inflation was 3.3%. The ONS was specific about the cause: the rise came almost entirely from the transport division, "particularly motor fuels," after the average price of petrol rose 8.6p a litre in a single month.3 That is a measured 0.3-percentage-point jump, directly attributed by the statistics agency to the war — the entire size of the shock's confirmed effect on the headline rate so far.
The Bank of England's Monetary Policy Report, published four weeks into the conflict, revised its near-term inflation forecast up sharply. In February, before the war, the Bank had expected CPI to fall to 2.0% by 2026 Q3 — essentially on target. By the April Report, its Q3 projection was 3.3%, a revision the Bank itself put at 1.4 percentage points.1 This is a forecast, not a measurement, and the rubric that governs this desk keeps it out of the headline and every hero stat for exactly that reason — but the Bank's own breakdown of where the revision came from is informative in its own right.
Bank staff attribute 0.9 points of the upgrade to the direct effect of higher fuel and utility prices on household bills, and a further 0.3 points to indirect effects as firms pass higher input costs through supply chains — together, the large majority of the revision, with food prices expected to move first.1 The mechanism is concrete: Brent crude, trading at $64 a barrel before the conflict, peaked at $119 on 31 March as the Strait closure squeezed supply.1
Here the data complicates the pitch. Rather than climbing toward the Bank's 3.3% projection, measured CPI fell in every release since March: 2.8% in April, 2.8% in May, 2.6% in June.456 The transport division tells a more mixed story: its annual rate, which jumped to 4.7% in March, kept climbing to 6.8% in May — the highest since December 2022 — before easing to 5.7% in June, as motor fuel inflation slowed from a 24.6% annual rise to 21.3%, the first monthly falls in petrol and diesel prices since the war began.56 By the Bank's own account, wholesale prices have partly reversed: Brent averaged $100 a barrel in the weeks before the April Report, then fell toward $79 immediately ahead of the Bank's June meeting as news of a prospective peace deal broke.7 The regulator Ofgem has confirmed the pass-through is real even as pump prices ease: it raised the household energy price cap by 13% for the third quarter, attributing the rise squarely to "higher wholesale gas prices, caused by the ongoing conflict in the Middle East."8
The Bank's own statement in June, written before the June CPI print, still expected inflation "to rise later this year as the effects of higher energy prices continue to pass through."7 Whether that happens depends on data not yet published: July's CPI figure is due on 19 August, after this piece went to press, and the size of any renewed rise will depend on how much of Ofgem's 13% third-quarter price-cap increase reaches bills, and on whether the slower indirect effects on food and services that the Bank flagged in April have yet to arrive. It is too early to say whether April–June's falls mark the shock genuinely fading or a lull before a delayed second wave — this piece reports the data available now, not a verdict on where the Bank's forecast lands.