British families are facing a fresh cost of living squeeze after the price of Brent crude oil topped $100 a barrel for the first time since July, driven by escalating hostilities in the Middle East that have raised fears over global supply disruption. The price rise, alongside UK natural gas hitting its highest level since December 2022, threatens to push up petrol prices, food and energy bills, and could force the Bank of England to raise interest rates, adding to mortgage costs. This poses a significant setback for First Minister Andy Burnham's efforts to ease household financial pressures, while also complicating Chancellor John Healey's task ahead of next month's Budget.

Brent crude rose as high as $101.58 a barrel following US attacks on Iranian tankers and Houthi strikes on Saudi Arabia, disrupting flows through the Strait of Hormuz. UK government borrowing costs also climbed, with ten-year gilt yields nearing 5.27 per cent and a recent 30-year bond sale fetching a record 5.82 per cent interest, the highest since 1998. Inflation, currently at 2.9 per cent, is forecast by economists to reach almost 4 per cent next year, with Bank of England governor Andrew Bailey warning that the Iran conflict and extreme weather could trigger a further burst of price rises, while UK mortgage costs have already risen faster than in any other G7 country bar possibly Japan.