From petrol prices to mortgage rates, the US-Israeli war with Iran has already had an impact on people’s finances in the UK.
How deep and sustained that turns out to be depends on the duration of the conflict and how quickly supply lines and economies can recover.
Here are some of the areas to watch out for.
Drivers may have already noticed that prices at the pump are on the rise.
By Monday, average petrol prices had ticked up by 4.95p to 137.78p a litre, while diesel had increased by 9.43p to 151.81p, the RAC motoring organisation said.
According to analysts, every $10 increase in oil pushes up pump prices by roughly 7p a litre.
Crude prices have risen sharply since the start of the war, although they are volatile as they react to the status of the conflict and commentary from the White House.
However, average petrol prices of 150p per litre are not out of the question if oil prices are elevated for some time.
While motoring organisations say that there are plenty of supplies, they are encouraging people to reduce non-essential journeys. They also suggest people amend their driving style, by not accelerating or braking too hard to conserve fuel.
Not everyone has a car or may not use one for a daily commute. However, when petrol rises, it can carry through to higher prices for goods and services.
For example, if transport costs for supermarkets increase that could then be reflected in the cost of food.
Before the war began, there had been a hope and expectation of a steady fall in the interest rates charged on new, fixed mortgages, as well as lower variable rates.
Now, the opposite is happening.
Some of the UK’s biggest lenders have raised rates, owing to their own funding costs rising and an expectation that the base borrowing rate will not fall as previously anticipated.
Mortgage rate rises for homeowners getting a new two or five-year deal, or renewing one, have gone up but not shot up, so far.
However, there is talk of “painful” rises to come for borrowers, particularly those shopping for shorter-term deals.
The average rate on a two-year deal has risen to 4.87%, and the average five-year fix is up to 4.98%, as of 9 March, according to the financial information service Moneyfacts.
The last time both were above 5% was in August last year.
At times of economic uncertainty, lenders pull mortgage products off the shelves, reducing choice.
That was seen on Monday when 330 residential mortgage products were withdrawn from the market across eight different lenders, with the expectation of repricing them at a higher level.
“When lenders take the step of pulling deals rather than simply tweaking pricing, it often indicates that funding costs have moved too quickly for incremental changes to keep pace,” said Adam French, head of consumer finance at Moneyfacts.
There is some protection in place for household gas and electricity bills, thanks to the price cap in England, Wales and Scotland set by energy regulator Ofgem.
However, it is time limited and does not cover everyone.
The maximum price for each unit of energy, for those on variable deals governed by the cap, is set until July.
In fact, prices are going down in April.
However, what happens now and until late May on the wholesale energy market will determine these household bills from the summer. A sustained period of high wholesale costs could mean a sharp increase in energy prices for millions of people.
The last time there was a particular spike, following Covid and Russia’s invasion of Ukraine, the government had to step in to help with the Energy Price Guarantee.
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Those looking to fix their energy unit price instead are facing a similar situation as people searching for a mortgage.
The most immediate impact of rising prices is felt by those who use heating oil, often stored in a tank outside their property. There is no cap that limits the cost.
Campaigners say prices have more than doubled since the conflict began, and orders have been limited as panic buying adds pressure on the sector.
“We may be heading into spring, but anyone running low on oil right now doesn’t have the luxury of waiting for prices to fall,” said Emma Simpson, chief executive of Rural Action Derbyshire.
Chancellor Rachel Reeves has promised to “explore further action” to address the “unique challenges” faced by households reliant on heating oil, while competition authorities are checking whether customers are being treated fairly.
“Generally, we would expect that customers who have placed orders for heating oil should receive it at the agreed price. Suppliers should be clear what they are charging and terms must be fair,” said Emma Cochrane, at the Competition and Markets Authority.
Just at the start of March, UK inflation – which charts the rising cost of living – was forecast to be at or around the Bank of England’s target level of 2% over the next five years, according to the Office for Budget Responsibility (OBR).
The government’s official forecaster said the price of a typical basket of goods would be going up at a rate of 2.3% this year and then 2% a year from 2027. But, it did those sums before the airstrikes on Iran began.
Analysts believe this is increasingly unlikely.
Making an inflation estimate becomes very difficult, given the volatile situation militarily and economically.
Yet, analysts do not think inflation will return to the peak of 11.1% seen in the UK in October 2022. That is because the war in Ukraine also caused spikes in the prices of basic foodstuffs, such as wheat and edible oil, owing to the role of Ukraine in producing those items. That is not the case now.
The Bank of England is charged with getting inflation to as close as 2% as possible, and its primary tool to do so is interest rates.
After the rate-setting committee met in February, the Bank’s governor Andrew Bailey said there was scope for further rate cuts this year.
That is now much more in doubt. Analysts who had widely expected borrowing costs to be trimmed in March have now ruled out that possibility.
But while borrowing money could become more expensive than previously thought, savings could be slightly more lucrative.
In times of uncertainty, people have previously hoarded savings. The spending power of that money may reduce, if the cost of living rises, and it may hit general economic growth in the UK.
Wider implications for our finances are highly dependent on how the war – and its global impact – plays out.
But, the choice of holiday destinations in the spring and summer may be more limited. Flights could get more expensive.
Jet fuel has gone up sharply in price. Although airlines have buying strategies that limit some of this impact, the longer aviation fuel remains expensive the harder it is not to pass this on through higher fares.
