UK inflation held steady at 3.0% in February, but the figure was dismissed by analysts almost as soon as it was published, with the Middle East conflict having already sent energy prices on a trajectory that makes the data redundant.
The Office for National Statistics said the consumer prices index (CPI) was unchanged from January, with slower rises in petrol and diesel prices helping to offset increases elsewhere.
But that dynamic has since gone sharply into reverse.
Charlotte Kennedy, financial planner at wealth manager Rathbones, said the conflict in Iran meant the latest figures were "already out of date when it comes to where prices are heading next," warning that rising oil prices were "beginning to feed through to forecourts" and could ripple through supply chains to push up the cost of everyday essentials including food.
James Smith, economist at ING, the bank, said UK inflation was now on course to peak at between 3.5% and 4% this autumn – around a percentage point higher than pre-war forecasts – and that interest rate cuts, which had been expected as recently as this month, are likely to remain on hold for the foreseeable.
Swap rate markets – where lenders price their fixed deals – are pricing in around three Bank of England rate hikes this year.
Smith said his 'base case' is that the Bank holds rates steady throughout 2026, with hikes only likely if energy prices spike further.
The shift is already being felt in the mortgage market, where more than 1,700 products have been withdrawn since 9 March as lenders reprice in anticipation of higher borrowing costs.
Many deals have come back, but at higher rates, with average two-year fixed mortgage rates having jumped from 4.85% to 5.56% since the previous inflation announcement, according to Moneyfactscompare.co.uk, reflecting the increase in swap rates.
The pain is most acute for the estimated 1.8 million borrowers expected to refinance this year.
Those rolling off low five-year fixed deals face monthly payments rising by more than £380 on a typical £250,000 loan, while tracker mortgage holders – whose rates move directly with the base rate – could see costs jump by around £430 a year from a single 0.25% increase.
Kennedy said households may need to "stay on the front foot," revisiting budgets and checking savings plans "remain resilient in the face of persistent cost pressures."