"The main economic consequence of higher energy prices would be to boost inflation. In the UK, illustratively, the current level of the oil price would, if maintained, add about 0.2%pts to headline inflation via higher petrol prices; and a sustained 40% shift up in natural gas price futures would boost this by a further 0.7%pts or so, via higher household utility bills."
"Yesterday, liquefied natural gas (LNG) prices rocked by over 40%, and oil rose by over 7%, after Qatar's state-run energy firm halted LNG production and Saudi Arabia temporarily shutting down some units of its massive Ras Tanura oil refinery following attacks by Iran."
The Office for Budget Responsibility's Spring Forecast is expected to show the UK maintaining fiscal targets and inflation declining toward target, supported by a record January budget surplus. However, recent Middle East tensions have disrupted energy markets significantly. Qatar halted LNG production and Saudi Arabia shut down refinery units following Iranian attacks, causing LNG prices to surge over 40% and oil prices to rise over 7%. These energy price increases risk reigniting inflation and the cost-of-living crisis. Higher oil prices could add approximately 0.2 percentage points to headline inflation through petrol costs, while sustained natural gas price increases could add another 0.7 percentage points through household utility bills. The government is not expected to announce major policy changes today, maintaining its commitment to one major fiscal event annually in autumn.
Read at www.theguardian.com
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