How the Iran war affects your money and bills
How the Iran War Influences Your Spending and Costs
The ongoing US-Israel conflict with Iran has already begun to reshape financial habits for many in the UK. From fuel expenses to housing loans, the economic ripple effects are evident. While President Donald Trump declared a temporary pause in hostilities, talks between the two nations stalled, fueling worries about prolonged financial strain. A research group estimates that the average working-age household in Britain may face a yearly loss of over £100 due to the crisis.
Pump Prices Rise as Oil Market Fluctuates
Motorists have reported climbing fuel costs, with crude oil prices surging since the conflict began. The RAC notes that the average petrol price hit 158.27p per litre on 13 April, marking an increase of more than 25p from earlier in the month. Diesel prices have climbed even sharper, reaching 191.5p a litre—an increase of nearly 49p since March. These changes mean filling a 55-litre car now costs £14 more than it did at the start of the crisis, while diesel has risen by £27.
“The situation remains highly volatile, with outcomes hinging on developments in the Strait of Hormuz,” said Simon Williams, head of policy at the RAC.
Financial Pressure on Mortgages
Interest rates for mortgages have also climbed, reversing earlier expectations of decline. Lenders are adjusting rates due to rising funding costs and uncertainty about future base rates. The average two-year fixed rate surged from 4.83% in early March to 5.89% recently, while five-year deals increased from 4.95% to 5.77% over the same period. This shift has reduced mortgage options, with about 1,500 fewer residential deals available, though over 6,000 remain on the market.
Energy Bills Face Uncertainty
Energy costs are expected to climb, driven by high wholesale prices. Ofgem’s price cap in England, Wales, and Scotland is set to expire in July, limiting its ability to shield households from surges. While prices dipped in early April, the coming months will decide whether summer bills rise sharply. Cornwall Insight forecasts that dual-fuel households could pay £1,861 annually under the July-to-September cap, up from the current £1,641.
Though the price cap offers some relief, it doesn’t apply to all consumers. Last year’s energy crisis, following the Ukraine invasion and the pandemic, prompted the government to introduce the Energy Price Guarantee to ease burdens.
