UK consumers and businesses are likely to face higher shop-price inflation for many months as global economic pressures persist [1, 2].
This trend threatens to undermine recent modest gains in inflation control and could prolong the cost-of-living crisis for households across the United Kingdom. The situation is driven by a combination of shipping disruptions and soaring raw-material costs linked to the conflict between Iran and the U.S. [1, 3].
Corporate impact has been widespread. Only 16% of firms have remained unscathed by the conflict [1]. On a global scale, the war has saddled companies with a $25 billion bill [3]. These increased operational costs are being passed directly to the consumer through higher prices for food and fuel [2].
Inflation data shows a volatile trend. UK inflation fell to 2.8% in April [4], but the Consumer Price Index reached 3.3% in May [5]. The Bank of England said last week that this figure is likely to be higher later this year [5].
Susannah Streeter said to The Scotsman that despite the April dip, the UK appears stuck in a 1970s-style economic backdrop of energy insecurity and persistent price pressures. This environment is characterized by growing political intervention in markets.
Price pressures are expected to continue throughout the summer months. Some forecasts suggest that higher food and fuel prices will persist until 2027 [2]. The UK government said that this economic squeeze will outlast any potential ceasefire deal [2].
“The UK still appears stuck in a 1970s-style economic backdrop of energy insecurity.”
The persistence of inflation despite a brief dip suggests that structural global shocks—specifically energy insecurity and supply chain instability—are overriding domestic monetary policy. If price pressures remain elevated through 2027, the UK faces a prolonged period of reduced consumer purchasing power and a heightened risk of economic recession.
