Bank of England Governor Andrew Bailey is prioritizing the gap between finished fuel prices and unprocessed crude to serve as a primary inflation indicator. These refining margins have widened since conflicts in Iran and Ukraine eliminated millions of barrels of refining capacity, leaving European drivers to pay the equivalent of more than $370 a barrel at the pump. The BoE estimates higher energy costs could add 0.4 percentage points to inflation during the second half of 2026.

The shift in monitoring mirrors a trend among economists at the European Central Bank who are tracking fuel shortages more closely than crude prices. Bailey warned that UK inflation could exceed 4% if Brent crude remains near $100 for several months. With the Strait of Hormuz disrupted and refinery output low, the governor stated that inflation risks remain to the upside.