'I don't want the children to see how worried we are': UK family finances hit by Iran war

Naomi did not think twice about packing up the family van for her teenage daughter's regular hospital trips before the US-Israel war with Iran. But not any more.

Fuel prices have risen since the war started, pushing the cost of transporting 10-year-old Riziah – who was born with complex medical problems – to a hospital in Liverpool for critical care more than 30 miles away.

What was once a normal expense is now causing the family to shift to somewhere else in order to cope.

I don't want the children to know how anxious we are,

she says.

As the cost of everyday life rises, BBC Panorama has spoken to families who were struck by the sudden financial hardship of a war 3,000 miles away.

Naomi lives in Chorley, Lancashire, with her husband, daughter, and teenage boy.

Fuel prices have now become a rising financial strain on families like Naomi's, who have no choice but to travel.

We've just loaded up the van, but it's only cost us just shy of £130. How is that doable? Naomi says,

We should just keep filling up your van each time.

Since the war began on February 28th, the family has been spending more on diesel per week, she says.

According to government reports, diesel has risen by 35% in less than two months, while petrol has increased 19%.

In real terms, the cost of filling a typical family car with petrol has increased by around £14. A tank of diesel is about £27 more expensive.

But it is not just travel costs. Naomi is also concerned about increased pressure later this year, when her home energy bills are expected to increase again – after significant hikes in recent years.

Riziah's illness means she is dependent on medical devices that use more electricity than the family's average consumption. For her wellbeing, the house must be kept warm all year round.

Millions of household electricity bills in England, Wales, and Scotland are covered by a price cap that sets a ceiling on each unit's cost of gas and electricity. The cap was dropped at the start of this month, but it is expected to rise in the next quarter, beginning in July.

Cornwall Insight, an energy consultancy firm, expects that the cap will rise to £1,843 a year for a typical household, up by more than 12%, or about £200.

Diesel and electricity prices are being affected so much by the closure of the Strait of Hormuz – the narrow waterway that separates Iran from Oman.

The strait is deep enough for the world's biggest tankers transporting crude oil, and when all is running as normal, a fifth of the world’s oil is transported through it from Middle Eastern oilfields.

However, Iran began to threaten shipping in the strait in retaliation for US and Israeli strikes early in the conflict. That effectively ended it, severely limiting the availability of oil and gas around the world.

There is currently no fire, but the strait remains blocked to the majority of traffic due to a standoff between Iran and the United States.

Despite the fact that the United Kingdom receives only a sliver of its natural gas from the region, the global price of both oil and gas – as well as higher wholesale gas prices faced by energy providers – has pushed up the international price of oil and natural gas as well.

As the disruption to shipping routes and the flow of fuel around the world spreads to the rest of the world, higher fuel and energy prices are expected to be accompanied by higher food prices later this year.

Many households already have little money in their monthly budgets to handle more financial stress, but the Wharton School of the University of Pennsylvania's economist and professor says it's likely to get tighter.

He is worried that the war could continue to affect families who are struggling to make ends meet.

"This is what worries me most. What's the worst affected? The lower-income households that are already vulnerable are the most vulnerable, and as a result, they are the hardest affected.

Transport and electricity prices are also impacting businesses. Most consumers are already paying the price, but rising costs, such as in food production and transportation, are likely to be passed on to customers over time.

At the same time, although saving prospects for savers is certainly encouraging, borrowers may be dissatisfied with the interest rate outlook.

The Bank of England uses rates to keep inflation in check, and it had been predicted to reduce them this year. As inflationary risks related to the Iran war are felt throughout the economy, it may no longer be able to do so.

The consumer prices index (CPI) reported that UK inflation increased to 3.3% in March 2013. After the Iran war, the highest rise in petrol and diesel prices in more than three years has risen from 3% in the year to March, up from 3%. 3 percent in the 12 months to February.

Inflation could peak at about 3. According to analysts, the year will see a rise of 5% to 4% this year.

The Bank of England predicted inflation would be below its 2% target in April, but it is still much less than double-digit rates seen in 2022, early on in the conflict in Ukraine.

According to leading economist Michael Saunders, mortgage interest rates are already rising pretty dramatically as markets react to expected rises in interest rates in the next few months.

That means the households struggling to re-fix their mortgage face much higher prices than they would have expected,

he says.

The interest on an average five-year fixed-rate mortgage has risen to 5.7%, up from 4. According to financial information firm Moneyfacts, 95 per cent of the war was declared before the war began.

Iona, a mother of three children in Mansfield, Nottinghamshire, is one of those impacted by a more volatile mortgage market.

She bought her house on a five-year fixed-rate mortgage, but it will end in September.

When her fixed rate came to an end, Iona was sure to face a rise in mortgage payments. But then the war in Iran started.

She currently pays £720 per month for her three-bedroom house, but that will now go up to £1,020, an increase of £300.

"I was gobsmacked. I had hoped that it would rise, but it didn't, but it was a big surprise.

Iona has agreed to a five-year fixed rate, which she claims was a gamble, but she did it because the rates were rising even higher.

She claims that her growing monthly outgoings mean she is already looking at how she can save at the food store while cutting out little luxury items for her daughter, such as going to music shows and dining out.

For Iona, the consequences of the war in Iran seem closer to home than she ever imagined.

"I didn't know that being thousands of miles away would have a direct effect on my life and my family's life.

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