Inflation rose in March to 3.3%, according to data published today, led by the rising price of energy. To tackle this latest shock to oil prices, UK energy secretary Ed Miliband urged the UK to move beyond the ‘fossil fuel era’ and onto a new world where clean energy powers the UK.
Despite US President Donald Trump’s claims of an extension to the Iran ceasefire, two container ships have reportedly been attacked off the Strait of Hormuz, with at least one incident being directly attributed to the Iranian military.
UK inflation
UK inflation rose to 3.3% in March, up from 3% in February, as the US/Israel-Iran war continued to push up prices.
The Office for National Statistics (ONS) said today (22 April) that motor fuel made the greatest contribution to the rise in the Consumer Prices Index.
Air fares also rose by 10% between February and March, the largest increase since 2016, although this was partially offset by a drop in rail prices.
These inflation figures are the first released since the start of the war, and reflect expectations that inflation will rise and remain high throughout the year, as the conflict puts pressure on the price of oil, fertiliser and other commodities.
ONS chief economist Grant Fitzner said that “the monthly cost of both raw materials for businesses and goods leaving factories rose substantially, driven by higher crude oil and petrol prices.”
Green transition
Raising concerns over the price of energy, commodity firm Vitol’s CEO Russel Hardy, said that the war could lead to the loss of over a billion barrels of oil, with millions currently lost per day.
Energy secretary Ed Miliband said that, as a result of this shock, “the era of fossil fuel security is over, and the era of clean energy security must come of age.”
Speaking yesterday (21 April) at the National Growth Debate, hosted by the Good Growth Foundation, Miliband said that the Labour government believed clean energy was the great industrial and economic project for the UK in the 21st century.
“For Britain and so many other countries, clean energy is now the only route to financial security, energy security and indeed national security.”
Fragile ceasefire extended
Trump has extended the truce in the Middle East indefinitely. In a social media post, Trump said that Pakistan had asked the US “to hold our Attack on the Country of Iran until such time as their leaders and representatives can come up with a unified proposal.”
“I have therefore directed our Military to continue the Blockade and, in all other respects, remain ready and able, and will therefore extend the Ceasefire until such time as their proposal is submitted, and discussions are concluded, one way or the other.”
Pakistan has been a key interlocutor of talks, with Islamabad the site of negotiations between the two sides.
Iran, however, said it had not requested the extension. In the past, Tehran called the blockade an act of war.
Two ships have reported attacks today. According to a report filed with the UK Maritime Trade Operations Centre (UKMTO), the master of a container ship reported an Iranian Revolutionary Guard Corps (IRGC) gunship had fired on their vessel.
A separate incident report said that a cargo ship had been attacked off the Iranian coast and is now stationary.
In both incidences, the crew were safe and no damage was sustained.
The centre added: “UKMTO is aware of high levels of activity in the Strait of Hormuz area and encourages vessels to report any suspicious activity.”
Observers say that the ceasefire remains flimsy in light of these attacks. The US’ chief negotiator, vice-president JD Vance, has not departed to join talks in Islamabad yet and hopes for a quick resolution to the conflict are fading. The US has reportedly bolstered its military presence in the Middle East.
US floats critical mineral club
Also speaking yesterday, US Trade Representative Jamieson Greer pushed for US allies to pay a “national security premium” for critical minerals sourced from outside China.
The US wants to form a network of nations who trade minerals at set prices, in order to protect domestic industry. The proposal would also include tariffs for outsiders to prevent them from driving down costs.
“When trading partners express concerns about the economic cost of price floors or mechanisms, I just say: what you’re talking about, which is cost efficiency, this is why we are in the situation we’re in,” Greer told the FT.
“There is a premium we pay, and I call it the national security premium, and we will all pay a national security premium to have a secure supply chain.”
However allies are reportedly concerned about the reaction of China, as well as increased costs for key sectors like defence and clean energy.
Beia Spiller and Madeline Craig-Scheckman, researchers in critical mineral projects, wrote that the plan would “shifts risk from firms to taxpayers, meaning policymakers and Americans must consider the trade-offs.”
Other news
- Royal Mail has published a Universal Service Improvement Plan, with revised targets to improve delivery services for first and second class letters and parcels
- EU transport commissioner Apostolos Tzitzikostas floated the idea of a jet fuel sharing system if there was a shortage across Europe
- Bloomberg analysis shows that the rising price of oil is unlikely to aid Russia’s flagging economy, despite intense pressure from Russian president Vladmir Putin to avoid a recession
Yesterday in trade
- The Trump administration’s Consolidated Administration and Processing of Entries (CAPE) system, for processing refunds for tariffs, went live
- Outgoing Hungarian prime minister Viktor Orbán said he would drop his veto of the EU’s proposed €90bn loan to Ukraine
- The UK government published its latest statistics on how many licences are currently extant for the exports of controlled non-military and military goods to Israel.
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