Why Middle East hostilities could spell trouble at home for Andy Burnham

By JOHN-PAUL FORD ROJAS, DEPUTY BUSINESS EDITOR Published: 00:33, 20 July 2026 | Updated: 00:40, 20 July 2026 The new Prime Minister faces a renewed cost-of-living squeeze with the return of conflict in the Middle East – raising the likelihood of higher energy bills and food prices. Mortgage rates are also creeping up as the resumption of hostilities between the US and Iran sends fresh shocks through the global economy just as Andy Burnham takes office. And for millions of workers, wages are barely keeping up with rising prices, meaning a likely squeeze on living standards over coming months. Higher gas and electricity bills are already biting, too, after Ofgem raised the energy price cap by 13 per cent at the start of July, increasing the typical annual bill by £221 to £1,862. Ofgem will next month announce the level of the cap from October. It could mean more pain as Britain enters the winter months and households turn on the heating. The outlook for the cost of living has been dominated by events in the Middle East since Donald Trump launched his war on Iran in February. The conflict sent oil prices soaring, translating to higher prices at the pumps as well as rising gas and electricity bills and the fear of costlier food prices. Those pressures abated with last month's peace deal – but the fragile accord has since fallen apart, meaning households are again likely to be feeling the pinch. The continuing conflict in the Middle East could spell trouble for the incoming Prime Minister US Central Command said it struck Iranian targets (pictured) for the ninth consecutive night as Andy Burnham prepared to take office The US said it intended to 'punish' Iran for the deaths of two American servicemen at a base in Jordan. Pictured: Images released by the US showed strikes against Iranian military targets Motorists are among those being squeezed, with RAC figures revealing since a three-month low on July 6, petrol prices have crept up by 2p a litre. 'The increases are likely to keep coming thick and fast as the cost of a barrel of oil has gone from the low $70 mark to mid-$80s in just under two weeks,' an RAC spokesman said. Food prices could prove volatile, too. Official figures for May showed food price inflation sank to 2.2 per cent. But experts fear the resumption of war could change the picture. The possibility of rising inflation has revived fears of interest rate hikes this year and lenders are responding. Figures from Moneyfacts on Friday showed average mortgage rates climbed over the course of the week for the first time since Easter, with 13 major lenders putting up borrowing costs. Consumer price index inflation figures for June, due this week, are expected to show it fell slightly to 2.6 per cent, from 2.8 per cent in May. But an increase for July is expected if oil and gas supplies from the Middle East are choked off by the closure of the Strait of Hormuz again.