UK inflation set to spike well above target after US sanctions on Iran push up oil price, experts warn

US sanctions on Iran are driving inflation in Britain well above the Government's target, figures out this week will show.

The Consumer Prices Index measure of inflation remained at 2.7 per cent in September, according to Commerzbank's economist Peter Dixon.

The Government has instructed the Bank of England to hold inflation at 2.0 per cent.

Petrol prices have risen almost 10 per cent since March on the back of President Trump's decision to reimpose restrictions on trade with the oil-rich state

Petrol prices have risen almost 10 per cent since March on the back of President Trump's decision to reimpose restrictions on trade with the oil-rich state.

The oil price could rise into 2019 and is likely to head above $100 a barrel from $80 on Friday, said oil analyst Richard Mallinson at Energy Aspects.

He said oil was set to rise due to high demand and low investment by the industry, but: 'Iranian sanctions are accelerating and intensifying higher prices'.

Mallinson said political instability in Venezuela and Libya could fuel further rises.

Dhaval Joshi, senior vice president at BCA Research, sees a direct link with UK inflation: 'Without the oil price going up, inflationary pressures would be diminishing'.