Global conflicts can have drive up the cost of a number of household bills (Image: GETTY)
The conflict in Iran could potentially escalate the cost of numerous household bills and have consequences for Brits wanting to go abroad. A money expert has outlined seven areas where British households are likely to see issues and how they might be able to pre-empt some.
James Andrews, a money expert at Be Clever with Your Cash, cautioned: “Global conflicts can have very local outcomes when it comes to the cost of things we’re buying in Britain – whether the UK is directly involved in the fighting or not. The good news is that there are things you can do now to get ahead of any future price hikes – from fixing current prices for your energy or mortgage to making sure you’re not paying a penny more for your petrol than you need to.”
Petrol prices
Oil prices have already risen since the onset of the conflict as Iran issued a warning for vessels to steer clear of the Strait of Hormuz. This narrow waterway channels around 20% of the world’s oil and gas.
James advised: “There’s nothing we can do about rising global prices, but there are lots of ways to save money on petrol and diesel. Check out sites such as Petrolprices.com or the RAC app to see the cheapest places to fill up near you. Also, consider how you drive, making your car lighter and turning off the air con can save you fuel.”
READ MORE: Martin Lewis flags ‘unprecedented’ change for all energy bills from April 1
READ MORE: £160 bills rise forecast just days after £117 cut announced
Energy prices
Rising tensions in the Middle East could lead to higher gas prices, with fears that Ofgem may be compelled to raise the energy price cap from July. Gas prices have already surged by 50% since the conflict began, and the Resolution Foundation warns this could add approximately £500 to the average energy bill if current trends persist.
James stressed that there’s “no certainty that prices will rise”, but advised people to check whether they’re on the most suitable tariffs for their circumstances. He added: “If you are able to find a fixed-rate energy deal which is cheaper than the Energy Price Cap, it may be worth switching to this now to lock in your energy prices over the period the price is set for.”
Mortgages
Borrowing costs could climb as a result of the conflict. Gilt yields and swap rates, both key factors in determining mortgage and lending costs, have already increased, which could trigger a knock-on effect raising costs for consumers as firms are obliged to reconsider any plans to reduce interest rates.
Interest rates
Should other household bills rise due to the conflict, the inflation rate will also increase and could encourage the Bank of England to adjust the base rate accordingly. The expert observed this could see interest rates climbing, which may spell difficulty for borrowers.
Shopping and groceries
James explained: “If supply chains are disrupted, this could impact the goods the UK imports, leading to a shortage in supply and rising prices. Worse, rising energy bills can impact everything from food prices to appliances and cars – as energy is used to help grow food as well as in manufacturing.”
Investments and pensions
Global stock markets have tumbled following the outbreak of the conflict, which will affect investors and pensioners. However, James cautioned people against making hasty decisions: “Investing is designed for the long term, especially when it comes to pensions, and unless you’re very close to retirement, short-term shocks should not have a huge impact on your pension overall.”
Holidays
Global conflict can influence which areas are deemed safe for holidaymakers, as well as affecting the cost of travel or tourism. This is especially pertinent in the current conflict, as Dubai Airport serves as a major hub for flights worldwide, which could impact travel even if your final destination is nowhere near the Middle East.
James recommended: “If you are in an area affected by the conflict, contact your holiday company or airline. The situation is changing all the time, so this is the best way to get the most up-to-date advice. You may be able to get a refund or rebook a flight or holiday if you’re now no longer able to travel as a result of safety reasons.
“The Foreign, Commonwealth and Development Office (FCDO) has updated its advice about which countries are safe to visit. If you travel to one of the countries it has warned against visiting, this can invalidate your travel insurance.
“If you have a package holiday booked, you may be able to get a refund or a chance to rebook the trip. However, if you have booked the holiday yourself (not through a package), you will need to contact the companies you’ve booked with to request a refund or to rebook. You can also contact your travel insurance provider for help.”