Conflict with Iran ‘could spell disaster for economy’
FOOD, energy and fuel costs could spike again due to the conflicts in Gaza and Ukraine, experts have warned.
The Israel-Hamas war has already contributed to petrol rising by 9p a litre to 149.5p so far this year, adding £5 on average to the cost of filling up a family car, according to the RAC.
The group’s fuel price expert Simon Williams warned prices could climb higher if tensions between Israel and Iran progress to open conflict.
He said: “Both petrol and diesel are now the most expensive they’ve been since November last year, which is bad for households, businesses and the economy, especially as we know there is a close link between fuel prices and inflation.
Tensions
“With increased tensions in the Middle East, the cost of oil is only likely to go up, which could push petrol well above 150p a litre.”
The International Monetary Fund warned that tensions between Iran and Israel, the conflict in Gaza, continued attacks on shipping on the Red Sea global trade route, and the war between Ukraine and Russia could all hit the global economy by causing commodity and transportation price spikes.
That in turn could force central banks like the Bank of England to keep rates high for longer than expected in order to combat inflation, dampening economic growth. The IMF said: “Such geopolitical shocks could complicate the ongoing disinflation process and delay central bank policy easing, with negative effects on global
economic growth.”