Global conflicts can have an impact on the pockets of Brits, according to one money expert
Conflicts abroad can drive up the cost of household bills in the UK, a specialist is warning(Image: GETTY)
The conflict in Iran has the potential to drive up the cost of a number of household bills. One money expert detailed the seven likely places British households will see issues and how they may be able to get ahead of some.
James Andrews, money expert at Be Clever with Your Cash, warned: “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 increased since the start of the conflict as Iran issued a warning for vessels to avoid the Strait of Hormuz. This narrow waterway ushers through 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, think about how you drive, making your car lighter and turning off the air con can save you fuel.”
Energy prices
Growing tensions in the Middle East could result in higher gas prices as well, with concerns that Ofgem will be forced to increase the energy price cap from July. Gas prices have already risen by 50% since the start of the conflict and Resolution Foundation warns it could add around £500 to the average energy bill if the recent trends continue.
James emphasised that there’s “no certainty that prices will rise”, but recommended people check if they’re on the right tariffs for their situation. 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
The cost of borrowing could increase due to the conflict. Gilt yields and swap rates, both crucial factors in calculating mortgage and lending costs, have already risen which could trigger a domino effect raising the cost for consumers as companies are forced to reconsider any plans to lower interest rates.
Shopping and groceries
James said: “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.”
Holidays
Conflict abroad can impact what areas are marked as safe for holidaymakers as well as affecting the price of travel or tourism. This is particularly relevant in the current conflict as Dubai Airport is a major connection for flights across the globe which could impact travel even if your final destination isn’t anywhere near the Middle East.
James advised: “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.”
Investments and pensions
Global stock markets have fallen following the start of the conflict which will affect investors and pension. But James urged people to avoid acting rashly: “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.”
Interest rates
If other household bills are increased due to the conflict, the rate of inflation will also rise and could tempt the Bank of England to change the base rate as a result. The expert noted this could see interest rates increasing which may spell trouble for borrowers.