US Diesel Export Ban Threatens UK Inflation Spike

A potential US ban on diesel exports has sent shockwaves through the global market, and experts warn it could push UK inflation near 5%.

Rising diesel prices have already topped 2 pounds per litre ($2.7) for the first time in the UK, with forecasters predicting a prolonged ban could send prices to 3 pounds and add as much as one percentage point to UK inflation.

The warnings come after reports that the US administration is considering an export ban unless European nations release stockpiles to control prices. An export ban would hit the UK hard due to its heavy reliance on imports, with British motoring organisation the RAC noting average diesel prices have crossed 2 pounds per litre for the first time.

This means filling up a 55-litre tank would cost 32 pounds more than before the Middle East conflict began. Thomas Pugh, chief economist at RSM UK, said a prolonged US diesel ban could push UK inflation by 0.5%, including indirect effects from a price surge filtering down supply chains to consumers rapidly.