A full U.S. diesel export ban could push U.K. diesel prices from £2 to about £3 per liter and lift inflation by 1 percentage point, Paul Dales, chief U.K. economist at Capital Economics, told Bloomberg. He said inflation could peak at 5.3%, increasing the likelihood that the Bank of England raises interest rates further and keeps them higher for longer. Thomas Pugh, chief economist at RSM U.K., said even a prolonged ban could add half a percentage point to inflation as higher diesel costs move through supply chains. Britain is especially exposed because its diesel stockpiles are thinner than those of most European countries and it is one of the largest importers of U.S. diesel. The risks emerged after British pump prices reached a record £2 ($2.70) per liter. G7 nations have agreed to release up to 100 million barrels of diesel and oil over four months, sending European diesel prices and Brent crude futures lower. Britain’s diesel demand is relatively inelastic because the fuel is essential to transport, agriculture and construction; economists estimate that a 10% price increase would reduce consumption by only 1%. Transport Minister Keir Mather said Britain has a resilient and diverse diesel supply. The Trump administration has warned that it could restrict exports unless European countries release stockpiles, while U.S. business groups say such a ban would raise rather than lower fuel prices. The potential shock comes as U.K. energy bills are expected to rise in January, pushing overall inflation above 4% by early 2026, while Bank of England officials consider rate increases to contain wider effects.