Inflation hits 3.3% as the price of flights soars: What to do now

The latest figures, released this morning, show UK inflation has risen to 3.3%.

The data it’s based on was collected in the middle of March, a few weeks after the US-Iranian conflict began. And although much of the impact of that conflict is yet to hit the high street, it’s clear it’s already beginning to show in certain areas.

If you’re a driver, you can’t fail to have noticed that fuel prices have jumped sharply. These figures confirm that petrol rose by 8.7% in just one month – the biggest increase since mid-2022, in the aftermath of Russia’s invasion of Ukraine. Over the past year, fuel costs are now up 4.9%, the fastest annual rise since early 2023.

But it’s not just fuel.

Air fares have also climbed, along with food prices although some experts say it could be many more months before we fully feel the effect of inflation on food costs.

Air fares tend to move quickly. They reflect fuel costs, demand, and availability all at once. When they rise as fast as the latest figures show, it’s often a sign that wider cost pressures are still building.

For households, travel is one of the first areas where plans suddenly get more expensive.

If you’re thinking about booking a trip, waiting may not help – prices tend to move up faster than they come down. Which is why, in many cases, booking sooner rather than later is probably currently the safer option.

You can’t control world events or what happens to inflation. But you can reduce how much it affects you.

Here are a few practical steps you can take now:

• Look at where you’re holding cash

If you’re keeping it in a savings account that’s paying interest at a rate that is lower than inflation, your money is losing value in real terms. In which case, it’s time to switch. This is a competitive market and there are plenty of accounts paying above-inflation rates (our top suggestions for Cash ISAs are here and ordinary savings accounts are here) so it’s well worth 10 minutes of your time.

• Avoid ‘set and forget’ bills

Insurance, utilities, TV and app subscriptions – these often creep up in cost quietly. A quick review can free up cash and nudge you into thinking about you what you’re paying and whether you still need it.

• Be cautious with big commitments

When there’s uncertainty around rates and prices, flexibility can be valuable. Think carefully before making long-term decisions. However, if you strongly suspect prices are only going one way and you know you’re going to need something, the smart decision is to buy now and lock the price in before it rises.

• Build (or rebuild) a buffer

Even a modest emergency fund can help absorb rising costs without relying on debt. Debt that you don’t have a plan to pay off, is a far bigger threat to your financial stability than inflation is likely to be.

None of this will stop inflation rising. But it will make it easier to deal with.