UK inflation rose to 3.1% in August, up from 2.9% in July and moving further away from the Bank of England’s 2% target, according to the Office for National Statistics. Higher petrol and diesel prices, along with costlier airfares, pushed annual transport costs up 4.6%. The UK’s policy rate is 3.75%, and the Bank of England meets on Thursday to decide whether to change it.

International oil prices are rising amid the conflict in Iran, adding pressure to households that rely on heating oil. In the UK, heating oil has climbed from about 60p a litre before the conflict to about 97p a litre, according to price comparison website Boiler Juice. The UK government said it is providing £53m to support heating oil users and allocating £1bn to local authorities through the Crisis and Resilience Fund. It also said it has cut duty on red diesel used by agriculture and fishing to its lowest rate in more than 20 years.

US consumer prices rose 3.4% year on year in August, with gasoline prices jumping 3.9% over the month and accounting for more than a third of the overall increase, Bureau of Labor Statistics data show. Average diesel prices climbed above $6 a gallon for the first time on Friday, a record high. Brent crude has continued trading above $100 a barrel as geopolitical conflict persists.

Energy costs are lifting inflation as major central banks prepare to announce their latest interest-rate decisions. The European Central Bank has raised rates to 2.5%, while the Federal Reserve has held rates at 3.5%–3.75% for five straight meetings. In the UK, inflation is 2.9% and is expected to rise, but markets broadly expect the Bank of England to keep its rate at 3.75%. Shipping constraints in the Strait of Hormuz linked to the Middle East conflict have helped lift Brent crude to around $105.

Oil and gas prices have surged after the conflict between the US and Iran escalated and the Strait of Hormuz was effectively closed, disrupting global supply and pushing oil to $105 a barrel. Brent crude moved back above $100 a barrel on Wednesday and kept climbing, while natural gas prices also jumped. President Trump said he did not expect the fighting to end until after the US midterm elections in November. Markets have also worried that inflation could accelerate, sending UK bond yields to their highest level in decades.

UK pump prices for unleaded petrol rose by 5p over the past week to 167.17p a litre, with diesel also up 5p to 188.63p, according to the RAC. The motoring group said the moves marked the biggest weekly increase since April. Fuel costs have jumped as the US-Israel war with Iran disrupts crude oil supplies across the Middle East, pushing Brent crude back to $100 a barrel for the first time since July. On Tuesday, US forces struck five Iranian tankers and Yemen's Iran-backed Houthi movement attacked oil facilities in Saudi Arabia, adding to upward pressure on prices.

Brent crude rose above $100 a barrel on Wednesday for the first time since July, after the US carried out reprisal strikes on five Iranian tankers and Houthi forces kept up attacks on Saudi Arabia. The escalation has effectively shut the Strait of Hormuz, a key route that carries 20% of the world’s oil and liquefied natural gas shipments, heightening supply disruption risks. About 90% of Saudi crude exports normally transit the strait.

A technical fault at air traffic control provider Nats has caused nationwide flight delays across the UK, disrupting departures at airports including Heathrow and Gatwick. About 200 flights have been cancelled, with British Airways and Ryanair among carriers confirming cancellations. Ryanair has cancelled more than 50 flights, leaving passengers waiting at airports for further updates.

Virgin Group founder Sir Richard Branson said Middle East tensions have disrupted oil production and transport, sending jet fuel prices higher and lifting airfares. The European benchmark jet fuel price has risen from around $800 a tonne to about $1,450 after peaking at more than $1,800 in April. Virgin Atlantic has responded by adding fuel surcharges of £50 for economy, £180 for premium and £360 for business class.