Inflation rose to 3.3% in the year to March, up from 3% in February, as the war in Iran triggered the biggest jump in petrol and diesel for more than three years.

This increase in the consumer prices index (CPI) measure of inflation was also partly driven by a spike in domestic heating oil prices, again caused by the conflict in the Middle East, according to the Office for National Statistics.

The retail prices index (RPI) measure of inflation was 4.1% in March, up from 3.6% in February.

AJ Bell head of personal finance Sarah Coles says: “Right now, inflation is only part of a picture that has been dominated in recent days by politics. Gilt yields soared on Monday night this week, as a result of both domestic and international dramas.

“If these remain elevated, it could be bad news for anyone on the hunt for a mortgage, as rates could rise.

“The mortgage market tends to react fairly quickly to changes like this, so anyone in the market for a remortgage may want to take this into account before the best rates disappear.” 

L&C Mortgages associate director David Hollingworth says: “No one will be surprised to see the impact of the Iran conflict feeding into a higher rate of inflation, driven largely by the increase in the cost of oil.  

“Mortgage borrowers are already well aware of the consequence of that inflationary pressure, as fixed rates have spiked since the beginning of the war.

“Our remortgage tracker shows that the average of the top ten lenders’ best two-year remortgage fixed rates has already jumped from 3.77% at the beginning of March to 5.01% today.

“This has driven the cost of a £200,000 25-year repayment mortgage up by almost £140 per month.”

But he says there have been positive signs in the past week.

Hollingworth adds: “We’ve seen a growing number of lenders trimming fixed rates as a result.

“Today’s news shouldn’t disrupt that trend for now and homeowners will be turning their attention to the Bank of England’s interest decision next week, hoping for clues on the direction of travel for base rate.  

“Higher inflation typically leads to higher interest rates but if a resolution can be found and inflation peaks at a lower level than originally feared, it could calm the need for base rate hikes.”