The rate of Consumer Prices Index inflation remained unchanged at 3% in February, the Office for National Statistics said. The rate of Consumer Prices Index (CPI) inflation has been gradually easing back towards the Bank of England’s 2% target level since last summer.

But experts have warned households in the run up to today’s inflation announcement, saying they could face another “twist” to the cost-of-living story in the months ahead due to war in the Middle East. Indeed, the February data covers the period directly before the Iran war raised fears over soaring fuel costs and supply disruption.

Speaking before today’s announcement, Sanjay Raja, Deutsche Bank’s chief UK economist, said the inflation outlook has “rarely been more uncertain than it is now”. He wrote in a research note: “We expect the UK’s disinflation story will take another twist on its (eventual) way down to target. The good news is that CPI is still expected to slide down in the coming months.
“The bad news? Higher energy prices appear poised to lift CPI meaningfully over summer, adding yet another hump in the inflation profile.”

Chancellor Rachel Reeves said the country is working to build “a stronger, more secure economy”.

“In an uncertain world we have the right economic plan, taking a responsive and responsible approach to supporting working people in the national interest,” she said. “We’re taking £150 off energy bills 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,” she also added.

Economists have been ripping up previous projections in recent days and warning that the US-Israel war with Iran has muddied the outlook for the economy. The Bank of England said on Thursday recent increases in wholesale energy costs would delay the return of CPI inflation to target, as it was already seeing higher fuel prices.

It is now expecting inflation to be around 3% in the second quarter of 2026, up from the 2.1% that had been forecast in February.

The central bankers stressed the situation is volatile and events over the next six weeks could shed light on the scale of the disruption and impact to prices. Economists have weighed in with their own projections of where inflation could go if things persist.

Edward Allenby, senior economist for Oxford Economics, said he is now expecting CPI inflation to exceed 4% during the second half of 2026. “Under our updated assumptions, we now anticipate a much sharper rise in petrol prices, while higher wholesale gas prices cause a 19% increase in the Ofgem energy price cap in July,” he said.

Oil and gas prices have jumped in recent weeks due to the conflict and other goods prices could also be affected by disruption to shipping through the Strait of Hormuz. Pantheon Macroeconomics agreed that, if the latest spike in gas prices is sustained, then CPI could be headed to 4% later this year.