Price hikes resulting from the Iran war will persist for at least eight months after the conflict concludes, a government minister has warned. Darren Jones, the chief secretary to the prime minister, cautioned that consumers will face higher energy, food, and flight prices "as a consequence of what Donald Trump has done in the Middle East," and emphasized there will be a "long tail from this."
The government has intensified planning to mitigate potential shortages triggered by the conflict, following the closure of the Strait of Hormuz—a critical shipping lane that handles approximately one-fifth of global oil and gas supplies—which has sent oil prices soaring. Meanwhile, peace talks scheduled for this weekend have stalled, with Iran insisting on no direct negotiations and Donald Trump calling off a trip for US negotiators to visit mediators in Pakistan.
Government Response and Contingency Planning
The prime minister will chair another meeting of the Cabinet committee established to address the fallout on Tuesday, after the so-called Middle East Response Committee convened last week. A contingency planning group of ministers, led by Mr. Jones, is meeting twice weekly. They are focusing on real-time monitoring of stock levels and evaluating existing plans to address supply chain disruptions.
Mr. Jones told the BBC that consumers are more likely to see price increases rather than empty supermarket shelves as a consequence of the conflict. "Quite frankly, that's probably going to come online, not just in the next few weeks, but the next few months. There's going to be a long tail from this," he said. When pressed on the duration of economic disruption, Mr. Jones stated: "I think our best guess is eight-plus months from the point of resolution that you'll see economic impacts coming through the system."
"So people will see higher energy prices, food prices, and those types of issues, flight ticket prices, as a consequence of what Donald Trump has done in the Middle East. The government here in the UK, the work that I'm doing with the prime minister is looking at all of those things and saying, 'what can we do within our power to help people to get through those difficult times?'"
Economic Impact and Household Pressure
Oil and gas prices have increased sharply since the conflict began at the end of February. Earlier this month, the Bank of England warned that approximately 1.3 million more UK households are facing a jump in their mortgage costs following the economic shock caused by the conflict. The Bank’s latest financial stability report (FSR) indicated that the UK economic outlook has "deteriorated," increasing pressure on households and businesses.
The government has sought to calm the public, urging drivers to continue filling up with petrol and not to alter travel plans amid fears over potential jet fuel shortages. This follows leaked government documents last week revealing that the UK could experience shortages of key supermarket goods this summer if the Iran war continues. Officials have prepared contingency plans for a "reasonable worst-case scenario," highlighting that the closure of the Strait of Hormuz could lead to carbon dioxide shortages.
Secret Analysis and Industry Concerns
The secret analysis—first reported by The Times—was codenamed "Exercise Turnstone" and was run by the government’s emergency committee, Cobra. The "reasonable worst-case scenario" was based on the assumption that the Strait of Hormuz had not been reopened and no peace deal had been reached. It warned that supplies of CO2 could fall to just 18 per cent of current levels—a warning based on a key UK plant suffering a mechanical error and high gas costs leading to a fall in production across Europe of ammonia and fertiliser, which produce CO2 as a by-product.
Farming and hospitality would be the two worst-hit industries, as CO2 is used to prolong the shelf life of foods, including salad, packaged meats, and baked goods. Supermarkets have since stated they are working with the government to plan for a worst-case scenario in which food producers would be affected.
