UK inflation steady before Iran war; oil price dips on Trump comments – business live

Rachel Reeves, the UK chancellor, has responded to the inflation figures.
In an uncertain world we have the right economic plan, taking a responsive and responsible approach to supporting working people in the national interest.
We’re taking £150 off energy bills [from measures in November’s budget] and providing targeted support for those facing higher heating oil costs. We’re also acting to protect people from unfair price rises if they occur, bring down food prices at the till, and cut red tape to boost long-term energy security — building a stronger, more secure economy.
On Tuesday, she ruled out universal support to deal with any future rise in energy bills, saying any government help would be targeted, and criticised the support offered by Liz Truss’s government as unaffordable and irresponsible.
The chancellor also said she would review the planned fuel duty rise in September, but did not commit to delaying or postponing it.
UK food price inflation eases but industry group warns it's 'the calm before the storm'
Food price inflation in the UK has also eased, but the Food and Drink Federation warned this could the “the calm before the storm,” as the conflict in the Middle East threatens to push up food prices again, becaue of higher energy and fertiliser costs.
Food and non-alcoholic drink prices rose at an annual rate of 3.3% last month, down from 3.6% in January. Prices fell in nine categories, with the largest drops for: olive oil (-10.4%), flours (-8.3%) and pizza (-4.9%).
Prices rose the fastest for beef and veal (20.6%), offal (17.0%) and whole milk (13.1%).
Karen Betts, chief executive of the Food and Drink Federation, said:
While food inflation fell slightly in February 2026, I am concerned that this is the calm before the storm. The longer the conflict in the Middle East goes on, the bigger its impact will be on food prices. With food and drink price inflation already running above historical averages, heightened energy, maritime fuel and fertiliser costs will put further pressure on prices.
Food and drink is an essential, bought by every household, every week. While it can take several months for cost rises to filter fully through to shop shelves, the cost of the Iran conflict will be felt by shoppers this year. If government is serious about tackling the rising cost of living, it must provide our industry with at least the same support as other manufacturing sectors. The current energy shock is yet another structural shock our industry will have to absorb, on top of the Ukraine war, the costs of realigning food law with the EU once again, and new regulatory burdens.
Members have reported that UK haulage companies have implemented an increase on Emergency Fuel Surcharge of up to 20%. And the ocean freight lines have also implemented an Emergency Bunker Surcharge of around $400/container to cover the oil costs
The detail shows UK clothing and footwear prices rose by 0.9% in the 12 months to February, compared with no change in the 12 months to January. The February figure was the highest recorded since March 2025, when the rate was 1.1%.
Prices normally rise in February, as the spring ranges start to enter the shops following the new year sales period, the Office for National Statistics said.
This was offset by a drop in petrol prices, as the ONS collected the data before the US and Israel launched air strikes on Iran on 28 February.
Transport prices overall rose by 2.4%, down from 2.7% in January. The largest downward effect came from motor fuels, where the average price of petrol fell by 1.6 pence a litre between January and February to 131.6p, compared with a rise of 2p a litre a year earlier.
Similarly, diesel prices fell by 1.4p a litre to 141.1p, compared with a rise of 2.3 pence per litre a year earlier.
Introduction: UK inflation steady before Iran war; oil dips on Trump comments
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Inflation in the UK was unchanged last month, as expected – before the Iran war drove up global energy costs, threatening a renewed price jump.
Official figures showed the consumer prices index (CPI) stayed at an annual rate of 3% in February, the same as in January. Economists had expected it to stay at 3%.
Clothing made the largest upward contribution to the monthly change while motor fuels made the largest, offsetting downward contribution, the Office for National Statistics said.
The outlook for inflation has changed dramatically since the onset of the Middle East conflict, which has sent oil and gas prices soaring after the effective closure of the key transit route of the strait of Hormuz.
This means the interest rate outlook has also shifted, with markets now expecting several rate hikes, rather than cuts, this year.
Charlie Ambler, co-chief investment fficer at wealth management firm Saltus, said:
While we expected February’s inflation data to remain stable around 3%, increasing oil prices are widely expected to push up the headline rate of inflation to near double the 2% target later this year, threatening the Bank’s slow and steady rate cutting cycle and frustrating markets. Should this materialise, markets are unlikely to respond well.
While the Bank of England has signalled a cautious and data dependent approach to monetary policy, resulting in a hold at 3.75% last week, financial markets have already reacted sharply to the changing global outlook. Investors are now pricing in the possibility of multiple interest rate increases this year, with some expectations pointing to as many as four rises before the end of 2026. The gap between market expectations and the Bank’s own guidance highlights just how uncertain the inflation outlook has become.
Oil prices dipped this morning to hover around $100 a barrel, after Donald Trump sent a 15-point peace plan to Iran and voiced optimism about ending nearly a month of war.
Brent crude fell 4.1% to $100.2 a barrel, while New York light crude lost 3.5% to $89.12 a barrel. Both benchmarks rose nearly 5% on Tuesday.
However, Iran’s Revolutionary Guards said it had launched a new wave of attacks against locations in Israel including Tel Aviv and Kiryat Shmona, as well as US bases in Kuwait, Jordan and Bahrain, according to Iranian state media.
Asian stock markets rebounded strongly, with Japan’s Nikkei up 2.87% while South Korea’s Kospi rose 1.6%.
The Agenda
8.45am BST: ECB president Christine Lagarde speaks