Inflation Climbs to 3.3% as Fuel Shock and Food Costs Squeeze On-Trade Operators

UK inflation climbed to 3.3% in the year to March 2025, up from 3% the previous month, according to newly released figures from the Office for National Statistics — marking the first official data to capture the economic impact of the ongoing conflict involving Iran, which broke out on 28 February.

The most dramatic single contributor to March’s inflation reading was motor fuel, which surged 8.7% month-on-month — the steepest increase recorded since June 2022. Year-on-year, pump prices were up 4.9%, the highest annual rise since January 2023.

Wholesale energy markets have been severely disrupted since hostilities began in the Middle East, with production and transit infrastructure across the region affected by ongoing military activity.

Food price inflation edged up from 3.3% to 3.7% in the year to March, driven by increases across chocolate and confectionery, meat, fish, and soft drinks. The ONS has noted that the timing of Easter — which fell earlier this year — may have influenced some of these movements, particularly in categories central to the on-trade’s seasonal trade.

Kate Nicholls, Chair of UKHospitality, said: “The inflationary impact of the conflict in the Middle East is evident in today’s figures.

“Hospitality businesses are highly exposed to increased fuel prices, through the price of food, drink, transport and other key inputs. As one of the final links in the food supply chain, the sector cannot be expected to pick up the bill for increased costs down the chain.

“Hospitality is already one of the most heavily taxed sectors in the economy and there is no room to absorb further cost increases. Ultimately, it will result in price rises at the till, further driving inflation.

“The impact on consumer demand should be closely monitored, as our pubs, restaurants, cafes and hotels will be the first to feel the combined hit of increased input costs and reduced spending.

“The Government should be looking closely at how it can reduce the cost of doing business for demand-sensitive sectors like hospitality, which are uniquely exposed to these kinds of economic shocks.”