ALEX BRUMMER: The high cost of conflict is making inflation harder to tackle

There can be no real surprise that Britain’s headline inflation rate is marooned at 6.7 per cent. 

Anyone filling up their vehicle with petrol or diesel will know that fuel prices are on the up again.

The initial upward pressure can be blamed on Saudi Arabia and Russia which have been limiting oil production with the aim of increasing returns.

There is growing concern that the violence in Gaza could spread to Israel’s northern border with Lebanon and Syria, and draw Iran more directly into the conflict.

That would make winning the battle against inflation more complicated.

Tensions: There is growing concern that the violence in Gaza could spread to Israel’s northern border with Lebanon and Syria and draw Iran more directly into the conflict

If Iranian exports were to be interrupted by a new round of Western sanctions, then between one or two million barrels a day of supplies would be lost and there could be a $20-a-barrel surge in prices.

In latest trading, crude oil rose as much as 2 per cent following a 7.5 per cent gain last week. In the wake of the Yom Kippur war in 1973 crude prices soared 300 per cent.

Improved, but still fragile, relations between Israel and its Arab neighbours should help to make sure that nothing dramatic happens this time in spite of anger on the Arab street about the wrongly-attributed Gaza hospital rocket tragedy. 

As relevant to UK households as temperatures plunge, is a 45 per cent rise in natural gas prices.

British consumer prices remain below the Bank of England’s forecast. Nevertheless, the conflagration in the Eastern Mediterranean will raise questions as to whether Rishi Sunak’s pledge to halve inflation before the end of the year will be met.

The Government will be assisted by the Ofgem price cap, which kicked in on October 1 and should lower the consumer price index (CPI). The battle will not be helped by upward pressure on hostelry prices.

UK Hospitality has cautioned the Chancellor, ahead of the Autumn Statement next month, that unless relief is provided, the bill for business rates could soar by £864million.

That would imperil enterprises on a precipice and could lead to a pass-through of higher costs to consumers.

Strip away energy and hospitality, and the underlying inflation prospects are improving, even if the UK has the most deep-seated problem in the G7.

Food prices finally are moderating and service sector costs coming down.

The latest CPI data will be the last before the Bank of England’s interest rate-setting Monetary Policy Committee assembles on November 2. 

Home owners and borrowers will be praying that the Bank, which voted narrowly to hold rates at 5.25 per cent in September, will show restraint.

Raising rates will do nothing to tame oil prices and only increases odds on a slowdown or even recession.

Nobody wants that.

Gas guzzlers

Just Stop Oil has garnered free publicity and tapped into a well of public sympathy on climate change.

Yet even as Britain makes progress toward becoming a greener nation, nobody should think that fossil fuels are finished.

Higher oil prices already have led the UK’s oil majors, BP and Shell, to slow their focus on renewables. 

Exxon is doubling down on natural gas with its £50billion purchase of Permian Basin neighbour Pioneer.

Britain’s Centrica, the owner of British Gas, already has signed up to a long-term supply deal for liquefied natural gas (LNG) with Qatar.

The Netherlands is securing its energy future by completing a 27-year supply deal with Qatar under which the Gulf state will provide 3.5m metric tons of LNG annually.

At home, the Energy Secretary Claire Coutinho is taking no prisoners.

She warns that without exploiting new fields in the North Sea, oil and gas output will halve by the end of this decade, making Britain ‘subservient to foreign regimes’. Is Labour energy czar Ed Miliband listening?

Ives of March

The assault on the cheaper end of the London Stock Exchange by private equity continues with Apax Partners swooping up tech consultancy Kin and Carta, the former print firm St Ives, for £203million.

A weak pound and a ‘London discount’ has turned the City into the world’s bargain basement. It is disappointing that boards – there to protect the interests of all stakeholders – give in so easily when they hear the rustle of crisp banknotes.

What a pity that chairman John Kerr, a Deloitte alumnus, has not shown more backbone and defended a company with six decades of history. 

Founder Robert Gavron, a former Guardian chairman, must be spinning in his grave.

This post first appeared on Dailymail.co.uk