According to experts, the repercussions of “Trumpflation” are expected to result in a minimum annual cost increase of £1,600 for some households in the UK.
The escalation of the conflict involving US President Donald Trump and Israel with Iran has already led to a rise in fuel and new mortgage prices.
Energy suppliers are now cautioning consumers that gas and electricity bills could surge by £250 per year due to a spike in wholesale expenses. Additionally, there are concerns about the overall increase in prices, affecting everything from airfares to retail products.
TUC General Secretary Paul Nowak stated that the ongoing chaos and illegal war are likely to continue threatening living standards, potentially necessitating more support to combat the effects of ‘Trumpflation’.
Energy bills
There are appeals for assistance, particularly in managing energy bills.
Currently, most households are shielded by Ofgem’s price cap, which is due to decrease by 7% from April 1. However, concerns arise regarding the future changes to the cap in July.
Energy UK, an industry group, predicts that households could face a £250 increase in their annual gas and electricity bills by the end of 2026, totaling an average of £1,891. The organization urges the government to promptly enhance efforts to provide targeted aid to the most vulnerable customers.
According to Dhara Vyas, the chief executive of Energy UK, it is premature to determine the full impact of the Middle East conflict on British energy bills. Nonetheless, it is prudent to prepare for potential interventions that are cost-effective and aimed at assisting those in greatest need.
The End Fuel Poverty Coalition estimates that approximately 13 million households could end up spending over 10% of their income on energy, with this proportion rising to one-fifth for the poorest five million households.
Simon Francis, coordinator of the coalition, expressed concerns about the possibility of another wave of fuel poverty stemming from the oil and gas price crisis triggered by the Middle East conflict led by Trump.
Separate research conducted by Age UK indicates that more than a quarter of pensioners were already facing financial challenges before the Iran war outbreak, with energy costs being a primary issue. The surge in oil prices, exceeding $102 a barrel due to heightened missile attacks by Iran on energy infrastructure in neighboring Gulf countries, has further compounded the situation.
Fuel prices
Many UK motorists are experiencing the impact through a surge in fuel prices at gas stations.
The RAC reports a significant increase in diesel prices, reaching 162.06p per litre in just over two weeks, while petrol prices have also risen, albeit to a lesser extent. This increase translates to an additional cost of around £10.80 per diesel fill-up and £5.20 for petrol for an average motorist.
For regular commuters and drivers who refuel weekly, this uptick may result in an extra cost of £21 per month for petrol and £270 annually if prices remain stable. Diesel drivers could face a higher burden, with a potential increase of £43 per month or £562 annually.
Simon Williams, head of policy at RAC, projects that if oil prices stay around $100 per barrel, petrol prices should not exceed 148p per litre. However, the outlook for diesel prices appears bleaker, possibly reaching an average of 170p per litre.
Mortgages
Prospective mortgage borrowers are also feeling the impact of the situation.
The cost of new fixed-rate mortgages has surged due to expectations of higher inflation resulting from the energy cost spike. The Bank of England is anticipated to maintain its base rate, contrary to prior expectations of a rate cut before the conflict.
Moneyfacts, a financial industry expert, reveals that the average two-year fixed-rate mortgage has risen from 4.83% to 5.28%, the highest since last April. Similarly, the average five-year fixed-rate has increased from 4.95% to 5.32%. Moreover, the number of available mortgage products has dropped by 689 since the conflict began.
According to Moneyfacts, the annual cost of a typical two-year fixed-rate mortgage