Bank of England Chief Economist Huw Pill stated on July 31 that the Iran war has not fundamentally shaken public belief that inflation will return to the Bank’s 2% target. UK natural gas prices have surged more than 70% and petrol prices roughly 10% since the conflict began on February 28, 2026. The BoE’s scenario analysis projects UK inflation could peak at up to 6.2% in early 2027 if elevated energy prices persist, compared to 3.2% to 3.5% in baseline forecasts. Pill was one of three Monetary Policy Committee members who voted against holding the Bank Rate steady at 3.75%, advocating for prompt but modest rate increases.
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