Jeremy Hunt cheered falling inflation numbers last week, claiming the data showed his plan to fix the economy was working.

But rapidly climbing oil prices now threaten to spoil the party and could become a major pre-election headache for the Government.

Saudi Arabia and Russia, the world’s second and third largest oil-producing nations, have been cutting supplies of crude in a move that threatens to not only halt the downward march of inflation but could push up prices yet again.

By the middle of next year, voters could be facing soaring fuel prices, sticky inflation and much higher housing costs because of high interest rates.

The timing could not be worse: the Conservative Party will by then be fighting the toughest election battle in years. The Tories are already 19 points behind Labour in the polls.

Continued inflation declines not a given

Oil prices have risen by 30pc since June, with the Brent benchmark trading around $94.10 a barrel on Friday. Economists predict it could soon breach the $100 mark.

Petrol and diesel prices have already risen by as much as 9pc at the pump since June and are expected to keep climbing.

It threatens to undermine Rishi Sunak’s promise to halve inflation by December, which would require it to hit 5.2pc.

Inflation fell unexpectedly to 6.7pc in August in a boost for Downing Street. However, Ashley Webb at Capital Economics says rising oil prices mean continued declines are not a given.

“It’s on the edge of whether the prime minister would actually manage to achieve his inflation pledge or not,” he says.

“If oil prices were to rise to $100 a barrel by the end of this year, we would still expect inflation to fall to 5.2pc in December.”

However, if prices keep rising toward $150, “the prime minister would comfortably fail his pledge”, he says.

Oil prices have been climbing as the Opec+ cartel has steadily cut back its crude exports throughout the year. Supply cuts mean that two million fewer barrels are now entering the market every day compared to the start of 2023.

Saudi Arabia and Russia have also introduced additional voluntary restrictions on their production until the end of the year.

Adding to the pain, Vladimir Putin last week banned all Russian diesel exports. A million fewer barrels will be entering the market every day as a result.

Warren Patterson, commodities analyst from Dutch bank ING, says: “The oil market is basically in a pretty large deficit from now all the way through until the end of this year.”

The global market is projected to face a shortfall of 3.3 million barrels a day in the last months of 2023.