TL;DR
- ONS CPI rose to 3.3 per cent in March 2026 from 3.0 per cent in February, with transport costs the main contributor
- The Bank of England's April Monetary Policy Report set out oil price scenarios from $108 to $130 a barrel
- Higher fuel costs feed into motor running costs and, with a lag, into the cost of vehicle parts and repair
- Car insurance premiums respond to higher repair costs and to total-loss valuations, both of which are sensitive to inflation
- The Association of British Insurers publishes quarterly average motor premium data drawn from member returns
Last reviewed: 15 May 2026
Key facts
- CPI inflation, March 2026 (ONS): 3.3 per cent
- CPI inflation, February 2026 (ONS): 3.0 per cent
- Main contributor to the rise: Transport, principally motor fuels (ONS)
- Bank of England oil scenarios (April MPR): $108 to $130 a barrel
- Forecast peak CPI (higher oil scenario): Above 6 per cent in early 2027
- HM Treasury unemployment forecast: 5.5 per cent in 2026 Q4 (average of new forecasts)
What ONS data shows
The ONS reported that CPI rose to 3.3 per cent in March 2026, from 3.0 per cent in February. The main contributors were transport costs, principally motor fuels. The transport category in CPI captures the price of motor fuels at the pump as well as vehicle prices and maintenance costs. A rise in the headline rate driven by fuel does not translate one-for-one into a rise in motor insurance premiums, but it feeds in over several quarters through repair labour, replacement parts and total-loss valuations.
How oil price scenarios connect to pump prices
The Bank of England's April Monetary Policy Report set out scenarios where oil peaks between $108 and $130 a barrel. Wholesale oil prices are one input into UK pump prices. Other inputs include refining margins, retailer margins, fuel duty and VAT. Fuel duty has remained at a frozen rate in recent Budgets, although the 5p temporary cut introduced in 2022 has been subject to repeated political review. Diesel typically tracks petrol but with separate refining margins. Pump price changes lag wholesale moves by one to four weeks depending on market conditions.
Why insurance premiums respond, but with a lag
Car insurance premiums are set on the expected cost of claims plus a margin. Claim costs split into vehicle damage, third-party property damage, third-party injury, theft and other categories. Vehicle damage costs respond to the price of parts, labour rates and the time vehicles spend off the road. Total-loss valuations track used-car prices, which are themselves sensitive to new-car supply and to scrappage rates. Premiums therefore respond to fuel-driven inflation indirectly and with a lag of several quarters, rather than immediately.
What the ABI data tells us
The Association of British Insurers publishes a quarterly Motor Insurance Premium Tracker drawn from member returns. The Tracker reports the average price actually paid for comprehensive motor cover. ABI data has shown premium movements diverging from the BIBA broker data and from price-comparison data, because each captures a different mix of new business, renewals and channel. The ABI figures are the closest available to the average price actually paid by UK motorists.
What drivers can review now
Drivers approaching renewal can request quotes from their existing insurer and at least one alternative. The Financial Conduct Authority's General Insurance Pricing Practices rules prohibit renewal prices that are higher than the equivalent new-business price for the same risk. Higher mileage, named drivers, voluntary excess and the choice of comprehensive versus third-party fire and theft all affect price. Telematics or black-box policies remain available for younger drivers and for drivers seeking a lower premium where mileage is low. Switching fuel type or to a hybrid or electric vehicle changes the risk profile, which is reflected in the premium.
Disclaimer. This article is for general information only and does not constitute financial, tax, immigration or legal advice. Figures, thresholds and rules can change. Always check the current position with the relevant authority (GOV.UK, HMRC, FCA, Ofgem or the appropriate regulator) before acting.
Frequently asked questions
Are insurance premiums going up because of the war?
Premium movements are driven by claim costs and by competitive dynamics in the market. Higher fuel prices and broader inflation increase repair costs and parts prices over time, which feeds into premiums with a lag. The link from a single geopolitical event to a specific premium change is indirect.
Will fuel duty change soon?
Fuel duty is set by the Chancellor in the Budget. The 5p temporary cut introduced in 2022 has been subject to political review at each Budget. The next Budget statement is the place to check for any change.
Does my no-claims discount protect me from price rises?
A protected no-claims discount preserves the discount itself if you make a claim. It does not freeze the underlying premium. The base premium can still rise at renewal in response to broader claims inflation.
Does the FCA rule mean my renewal cannot rise?
No. The rule prohibits renewal pricing that is higher than the equivalent new-business price for the same risk. Both renewal and new-business prices can rise together to reflect higher claims costs.
Where is the most reliable source for average premiums?
The Association of British Insurers Motor Insurance Premium Tracker reports the average price actually paid for comprehensive cover, drawn from member returns. ONS price indices report price changes for transport categories rather than premium levels.
