UK politics latest: Inflation remains at 3% as Rachel Reeves warns of ‘significant’ challenges over Iran war

The prime minister will face MPs on Wednesday as Britain tries to develop a plan to reopen the vital Strait of Hormuz.

Sir Keir Starmer will undergo his weekly grilling at Prime Minister’s Questions, a day after Rachel Reeves warned the economic impact of the Iran war could be “significant”.

Central to this impact is Tehran’s effective blockade of the Strait of Hormuz, a vital shipping route for oil and gas.

The blockade has caused oil prices to rise above US$100 a barrel and prompted Shell boss Wael Sawan to warn at an industry conference on Tuesday that Europe could face oil shortages next month if it remains closed.

Donald Trump has repeatedly asked other countries to take a role in opening the strait, and the UK is now leading efforts to create a plan to achieve that goal.

In a meeting with Saudi Arabia’s Crown Prince Mohammed bin Salman on Tuesday night, Sir Keir said the UK was “currently working with partners on what a viable plan might look like to secure the flow of goods via the key sea route”.

However, it appears that the deployment of any navy ships is unlikely to occur as Iran continues to threaten ships in the strait with missiles and drones.

Iran, on the other hand, insists that the strait remain open to ships that have no connection with countries it sees as enemies.

ONS chief economist Grant Fitzner said: “Following last month’s slowdown, annual inflation remained unchanged in February as various price movements offset each other.

“The biggest factor increasing was clothing prices, which rose this month but fell a year ago.

“This was offset by declines in oil costs as prices picked up before the start of the conflict in the Middle East and the subsequent rise in crude oil prices.”

The stable picture for inflation does not yet reflect the impact of the conflict in the Middle East on the cost of living in the UK; The first attacks occurred at the end of February.

Oil and gas prices have risen in recent weeks due to the conflict, and prices of other goods could also be affected by the disruption to shipping in the Strait of Hormuz.

With the Iran war still disrupting the flow of oil around the world, Britain expects prices to start rising again.

Oil has risen from $70 before the war to as much as $100 now, but has risen well above that milestone multiple times in the past few weeks.

This is expected to be reflected not only in higher energy bills but also in transportation and production costs, pushing inflation in the opposite direction. Before the start of the war, the Bank of England had signaled that inflation would reach the 2 percent target set by the government by the spring.

Meanwhile, the Institute of Grocery Distribution (IGD) warned that food inflation could exceed 8 percent by June this year “if the deterioration in global energy markets continues.”

The chancellor insisted the “correct economic plan” was in place in an “uncertain world”.

Rachel Reeves said: “In an uncertain world, we have the right economic plan that takes a responsive and responsible approach to supporting working people in the national interest.

“We are offering £150 off energy bills and providing targeted support to those facing higher heating oil costs.

“We are also acting to protect people from unfair price increases, reduce food prices at the till, and reduce red tape to increase long-term energy security, creating a stronger, more secure economy.”

According to official figures, inflation in the UK was flat at 3 percent last month before the impact of the Iran war.

The Consumer Price Index (CPI) inflation rate remains unchanged from the level reported in January, the Office for National Statistics (ONS) said.

It was consistent with economists’ predictions.

However, the stable picture of inflation does not yet reflect the impact of the conflict in the Middle East on the cost of living; The first attacks occurred at the end of February.