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A sustained spike in energy prices driven by the US-Israel war with Iran could mean UK inflation ends the year one percentage point higher than expected, the Government’s official forecaster has said.

Professor David Miles, a member of the Office for Budget Responsibility (OBR’s) budget responsibility committee, said the impact of the conflict on UK prices could be “significant” and “completely unwelcome”.

Quizzed by MPs on the Treasury Committee following the OBR publishing new forecasts alongside the Chancellor’s spring statement last week, Prof Miles said oil prices were currently about 20% higher than they were before fighting escalated, and gas prices were up by about 50%.

“If there’s no change in the picture on prices from now on forward, we estimate something like a 1% higher level of consumer prices in the UK by the end of the year,” he said.

“We had thought, without taking all this into account, that the inflation rate in the UK might be pretty close to 2%

“Right now, if prices don’t change from where they are both the spot and market expectations for futures prices, which is particularly important for the Ofgem price cap by the end of this year we think the inflation rate would end the year not near 2% but nearer 3%.

“Material, significant, as yet not on the same scale as we experienced after Russian invasion of Ukraine.

“Enough to be noticeable and completely unwelcome, because there’s no upside to all this.

“I’d have given you a different answer probably yesterday morning, and by the end of the week it could look different again. It’s not clear which way we go from here.”