UK Inflation Hits 3.3% as Transport and Hospitality Sectors Bear Brunt of Fuel Price Surge
Inflation Rises on Largest Fuel Price Jump in Three Years
UK inflation rose to 3.3% in the year to March 2026, up from 3% in February, with the Office for National Statistics[1] attributing the increase largely to higher fuel prices following the US-Israel war with Iran. The data provides the first official measurement of how the conflict, which began on 28 February, is affecting UK businesses and consumers.
Motor fuel prices increased by 8.7% month-on-month in March - the largest increase since June 2022, shortly after the Russian invasion of Ukraine[1]. Over the year to March, fuel prices rose by 4.9%, the highest rise since January 2023.
The impact extends beyond pump prices. German airline Lufthansa announced[2] it would cut 20,000 short-haul flights over summer, citing soaring jet fuel prices that have made many routes "unprofitable". Jet fuel has doubled in price since the start of the conflict, as the Strait of Hormuz - through which a fifth of the world's energy usually passes - has been effectively closed by Iran.
Transport Sector Faces Six-Figure Cost Increases
Among the UK's 73,743 freight transport companies[3], the impact has been immediate and severe. Stuart Wring, who runs Wrings Transport[4] at Avonmouth in Bristol, calculated that the war has increased his firm's fuel bill by £100,000. "March was £45,000 over budget," he said, "And April's already going through the roof, it will be £60,000 over easily".
The RAC's latest figures[4] show petrol prices up by 24.7p and diesel by 47.8p a litre since 28 February. For haulage firms operating fleets of heavy goods vehicles with 450-litre tanks, these increases translate into substantial additional costs that must be passed on to customers through fuel surcharge mechanisms.
The aviation sector faces similar pressures. The Gulf region accounts for about 50% of Europe's aviation fuel imports, with the Al-Zour refinery in Kuwait alone providing roughly 10% of Europe's jet fuel imports[2]. Several airlines including KLM-France and Delta have temporarily cut flights, while others have raised ticket prices to pass costs to consumers.
Hospitality and Food Service Under Pressure
The UK's hospitality sector faces a double challenge from rising fuel costs. With 83,781 take-away food shops and mobile food stands alone[3], businesses across the sector rely on fuel for food deliveries and customer transport, while also facing increasing food prices as transport costs ripple through supply chains.
Food inflation rose from 3.3% to 3.7% in the year to March[1], driven by chocolate and confectionery, meat, fish, and soft drinks. The Food and Drink Federation[1] forecasts food inflation could reach as high as 10% by the end of the year, as it typically takes seven to 13 months for cost increases in the food supply chain to be reflected in retail prices.
Manufacturing Costs Rise Across Supply Chains
The impact extends beyond direct fuel costs. Karex[5], the world's largest condom manufacturer producing more than five billion units annually, announced it would raise prices by up to 30% due to disrupted supplies of oil-derived materials including ammonia and silicone-based lubricants. The Malaysia-based firm supplies major brands including Durex and Trojan, as well as the UK's NHS.
Wholesale energy prices have soared since the US-Israel war with Iran began, with production and transportation of energy across the Middle East slowing or stopping entirely due to missile strikes and drone attacks[1]. Around a fifth of the world's crude oil and liquified natural gas, as well as other petrochemicals, usually passes through the Strait of Hormuz[5].
Business Insolvencies and Regional Impacts
Recent CompanyPulse data[3] shows 167,499 UK companies are currently in various stages of insolvency, including 108,882 in liquidation and 42,529 in voluntary arrangements. While these figures represent a snapshot rather than a trend directly attributable to recent fuel price increases, sectors with high fuel dependency face particular pressure.
The geographic distribution of the UK's 5.6 million companies[3] shows concentrations in major urban centres, with London hosting 1,052,598 companies, followed by Manchester with 102,174 and Birmingham with 92,629. These metropolitan areas, with their dense networks of transport and logistics operations, may see disproportionate impacts from rising fuel costs.
Oil prices fluctuated on 22 April after US President Donald Trump extended a ceasefire with Iran[6], with the global benchmark wholesale price dipping to $97.60 a barrel before rising again to briefly hit $100 following reports of ships being attacked in the Strait of Hormuz. The uncertainty continues to affect energy markets, with traders remaining cautious about future price movements.
Economists predict inflation could peak near 4% this year[1] - higher than the Bank of England's 2% target but substantially below the double-digit rates seen in 2022. However, analysts note that some factors may provide temporary relief, with the domestic energy price cap falling this month[7], potentially reducing the average household energy bill by about £10 monthly. This downward pressure may be short-lived, with energy bills expected to rise again with the next price cap in July.