‘Trumpflation’: how the Iran war’s economic storm could affect Britons

## Summary
Illustration: Anaïs Mims/Guardian Design / Getty Explainer ‘Trumpflation’: how the Iran war’s economic storm could affect Britons Yet another cost of living crisis looms with fuel, food, holiday, energy and home loan prices expected to rise Middle East crisis – live updates Here we go again. The economic storm caused by war in the Middle East is already pushing up the cost of key household outgoings, including mortgage payments, energy bills and driving. The spike in home loan costs means Britons taking out a new two-year mortgage deal face paying £900 a year more on average than before the Iran war as “Trumpflation” pushes up borrowing costs (based on borrowing £250,000 over 25 years). Back then, the soaring energy costs and supply chain disruption it caused sent food price inflation to 19.1%, which was the highest rate since 1977 .

## Article Content
Trump tax to hit Brit consumers this summer.
Illustration: Anaïs Mims/Guardian Design / Getty
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Trump tax to hit Brit consumers this summer.
Illustration: Anaïs Mims/Guardian Design / Getty
Explainer
‘Trumpflation’: how the Iran war’s economic storm could affect Britons
Yet another cost of living crisis looms with fuel, food, holiday, energy and home loan prices expected to rise
Middle East crisis – live updates
Here we go again. For Britons it has been a rollercoaster few years and just as better times seemed ahead the country has been plunged into a fresh cost of living crisis.
The economic storm caused by war in the Middle East is already pushing up the cost of key household outgoings, including mortgage payments, energy bills and driving. There are warnings that the weekly shop will be next.
We look at how the unfolding economic crisis caused by the war could affect you.
Cost and choice of home loans
In a few short weeks the Iran war has had a “catastrophic” effect on the UK home loans market with nearly 1,000 mortgage products pulled by lenders.
The spike in home loan costs means Britons taking out a new two-year mortgage deal face paying £900 a year more on average than before the Iran war as “Trumpflation” pushes up borrowing costs (based on borrowing £250,000 over 25 years).
On Thursday, the Bank of England held rates at 3.75% at its policy meeting. Before the war, the central bank was expected to cut them. Now the talk is of rate rises.
This matters if you are trying to get on the property ladder or your fixed-rate deal is coming to an end. About 1.8m deals are due to end in 2026, and most of these borrowers will need to secure a new mortgage.
“The shocks caused by the unrest in the Middle East are having a catastrophic impact on the UK mortgage market,” said Rachel Springall, finance expert at data firm Moneyfacts.
“Since last week, the average two-year fixed mortgage rate has risen by around 0.5%, to 5.35%,” she said, adding that the outlook pointed to more rate increases being on the cards.
What about my energy bills?
There is no good news here either. The war has caused an energy price shock that experts think will add
more than £300
a year to a typical household energy bill.
In the short-term, households are shielded from roiling energy markets by the price cap in England, Wales and Scotland which is set by the energy regulator, Ofgem. From April to June, the unit costs set by cap mean the average annual dual-fuel bill works out at £1,641. From July, according to analysis by Cornwall Insight, an energy consultancy, that figure could jump to £1,972 a year.
Before the war started it had been possible to secure a fixed energy tariff that could deliver a saving of several hundred pounds versus the price cap, but these deals have evaporated and are unlikely to return until energy prices stabilise.
The financial pain has been more immediate for the 1.5m UK households that use
heating oil
. The fuel is not protected by the price cap and heating oil customers say the cost of the fuel has more than doubled since the war started. The steep increase has forced the government to put up £53m to support low-income households with the cash to be shared out by local councils.
How much more will it cost to fill up my car?
When there is an energy price shock like this, one of the first places price increases show up is at the pumps. Based on the current worrying trajectory, the average price of a litre of unleaded petrol is likely to reach 150p, and diesel possibly 180p, by Easter, says the RAC.
“Since the conflict began, average petrol prices are now almost 12p (9%) higher at 144.51p a litre, with diesel up by twice that amount (24p, 17%) to 166.24p,” said Simon Williams, the head of policy at the RAC. This means the war has added £6.40 to the cost of filling a typical family car with unleaded petrol since the start of the month, while the figure for diesel is a hefty £13.
“The oil price has been consistently above the $100 a barrel mark this week, so unfortunately further rises look all but inevitable going into next week,” continued Williams. “With many people heavily dependent on the car, the pressure on household budgets is beginning to intensify.”
Even if you do not drive, the rising price of fuel could affect you. If the cost of transporting food around the UK increases for supermarkets, they could seek to pass that on to shoppers at the checkout.
To ease the energy crisis, workers are being
urged to carpool or work from home by the International Energy Agency
, the world’s energy watchdog. Drivers are also advised to do their best driving and avoid accelerating or braking too hard to conserve fuel.
Petrol and diesel prices can vary hugely at forecourts
so, if you have to drive, it is more vital than ever to shop around. Use apps and websites such as PetrolPrices and myRAC to see where fuel is cheapest in your area.
What about the price of the weekly shop?
“Oil and gas is to busine

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## Expert Analysis

### Merits
N/A

### Areas for Consideration
- Your travel insurance will also cost a bit more, especially for travel outside Europe, says Alan Dean of CoverForYou. “This is due to a greater risk you’ll need to claim for cancelling your flight, along with an increased likelihood of delayed flights and curtailed trips.” The comparison site Go Compare said its data showed that travel insurance costs had risen in most of the areas affected by the Middle East crisis.

### Implications
- Illustration: Anaïs Mims/Guardian Design / Getty Explainer ‘Trumpflation’: how the Iran war’s economic storm could affect Britons Yet another cost of living crisis looms with fuel, food, holiday, energy and home loan prices expected to rise Middle East crisis – live updates Here we go again.
- There are warnings that the weekly shop will be next.
- We look at how the unfolding economic crisis caused by the war could affect you.
- On Thursday, the Bank of England held rates at 3.75% at its policy meeting.

### Expert Commentary
This article covers energy, price, war topics. Areas of concern are also raised. Readability: Flesch-Kincaid grade 0.0. Word count: 1555.