The repercussions of the “Trumpflation” aftermath are expected to impose a minimum annual financial burden of £1,600 on some UK households, according to experts.
The ongoing conflict between US President Donald Trump and Israel with Iran has already triggered an increase in fuel and new mortgage costs.
Energy providers are now cautioning that gas and electricity prices could soar by £250 per year due to a surge in wholesale expenses. Additionally, there are alerts that various expenses such as airfares and retail prices are also on the rise.
TUC General Secretary Paul Nowak emphasized the potential threat to living standards posed by this illegal war and continual turmoil, suggesting that additional support may be necessary to combat the effects of ‘Trumpflation.’
One area of concern is the impact on energy bills, with calls for assistance in this regard. While most households are currently shielded by Ofgem’s price cap, which will decrease by 7% from April 1, uncertainties loom over future adjustments in July.
According to Energy UK, projections from several energy suppliers indicate a potential £250 surge in yearly gas and electricity expenses for the average household in the final quarter of 2026, reaching an average of £1,891. The government is being urged to promptly enhance efforts to provide targeted aid to the most vulnerable customers.
Dhara Vyas, Chief Executive of Energy UK, stressed the importance of readiness for any potential impact on British energy bills resulting from the Middle East conflict, emphasizing the need for cost-effective interventions to assist those most in need.
The End Fuel Poverty Coalition estimates that around 13 million households could end up spending over 10% of their income on energy, rising to a fifth for the poorest five million households.
Simon Francis, Coordinator of the coalition, expressed concerns about a potential surge in fuel poverty due to the oil and gas price crisis triggered by the Middle East conflict prompted by Trump.
Moreover, research from Age UK indicates that prior to the outbreak of war in Iran, over a quarter of pensioners were already facing financial challenges, with energy costs being a primary issue.
The escalating fuel prices are affecting millions of UK motorists, with diesel prices surging by nearly 20p to 162.06p per litre and petrol prices increasing by around 10p to 142.29p per litre. This rise translates to an additional cost of approximately £10.80 for diesel and £5.20 for petrol during each fill-up for a typical motorist.
For regular commuters and drivers who refill their tanks weekly, the increased costs could amount to an extra £21 per month for petrol or £270 annually if prices remain stable. Diesel drivers could face an even higher cost increase, with an additional £43 per month or £562 annually.
RAC’s Head of Policy Simon Williams outlined potential price thresholds for petrol and diesel based on oil prices, indicating a possible increase to 148p per litre for petrol and 170p per litre for diesel.
Borrowers seeking mortgages are also grappling with elevated costs, as fixed-rate mortgage rates have risen sharply due to expectations of heightened inflation from the energy price surge.
Moneyfacts reported an increase in average two-year and five-year fixed mortgage rates, with a reduction in available mortgage products since the conflict began. Borrowers are advised to prepare for potential fluctuations in the mortgage market amid the global economic impact of actions led by the US and Israel in Iran.
When considering the combined effects of rising diesel prices, increased mortgage rates, and anticipated energy cost hikes, the total additional expense for an average household over the next year could reach £1,600. If diesel prices hit 170p per litre, the total increase would amount to £1,827. Similarly, for petrol users, the combined rise in costs could reach £1,308 annually or £1,472 if unleaded prices reach 148p per litre.
The potential rise in other expenses due to the conflict’s aftermath remains a concern, with warnings of possible increases in various family costs.
While the impact on food prices remains uncertain, the disruption in key trade routes due to the conflict could potentially lead to higher food costs over time.
Economist Thomas Pugh anticipates a year-end inflation rate of around 3.5%, with the possibility of further increases if the Strait of Hormuz experiences an extended closure. As of now, inflation stands at 3%.