Cost of living crisis returns amid Iran war

Published: 10 March 2026

The English Chronicle Desk

The English Chronicle Online — UK News

The war in Iran has dominated headlines for nearly two weeks, but its ripple effects are now being felt in Britain in a way that is impossible to ignore: the cost of living crisis has once again been thrust centre stage.

BBC political editor Chris Mason reports that while the Foreign Office is consumed with the logistical challenge of helping Britons stranded in the Middle East, the domestic consequences are far broader. Millions of households are facing rising bills, with petrol and heating oil prices climbing sharply as global energy markets react to uncertainty over the Strait of Hormuz — a vital artery for oil supplies.

Petrol prices have already shot up, and MPs from rural constituencies and Northern Ireland are pressing ministers over the soaring cost of heating oil, which many homes outside the gas network rely on. Industry insiders say they are “price takers,” with little storage capacity, meaning wholesale price rises are passed directly to consumers.

The government has acknowledged the problem, with Chancellor Rachel Reeves promising to explore ways to help households. She pointed to the energy price cap, in place until June, as a temporary buffer, but admitted the situation is precarious.

Former Chancellor Jeremy Hunt reminded MPs of the Treasury’s long‑standing calculation: a 20% increase in energy prices adds 1% to inflation and cuts growth by 0.5%. With oil prices already nearing $120 a barrel, the economic consequences could be severe if disruption continues.

Prime Minister Sir Keir Starmer has sought to keep the cost of living at the forefront of his agenda this year, but global crises have repeatedly drowned out domestic concerns. Now, with energy bills flashing red for millions of families, the issue is unavoidable.

Opposition parties, including Reform UK, are expected to seize on the crisis, demanding urgent government action. MPs will meet Treasury ministers this week to raise their constituents’ concerns directly.

The government admits it has little control over the duration or severity of the conflict. If oil flows freely again through the Strait of Hormuz, the impact on UK households may be limited. But if disruption continues, the consequences for inflation, growth, and family budgets could be profound.

Read More At>>