While Trump's comments might have injected some much-needed optimism into markets, there has been little detail on when or how the Strait of Hormuz will reopen.

It means that disruptions to supply chains and energy markets are likely to persist, further squeezing household budgets.

The Food and Drink Federation has warned that grocery inflation could reach at least 9 per cent by the end of the year, up from the 3.2 per cent that it had forecast last September.

Dr Liliana Danila, FDF's chief economist, said: 'The food and drink sector is already feeling the force of this geopolitical shock.

'As one of the UK's energy intensive industries, manufacturers are facing mounting energy bills, rising transport and packaging costs and disruption across key supply chains.

'These pressures are hitting simultaneously, and are a significant challenge for businesses to absorb.'

She added: 'The current situation is unprecedented and hard to predict, however given the scale and speed of these cost increases, and despite companies' best efforts not to pass price increases on, it's clear that food inflation is going to rise in the months ahead.'

The FTSE is up over 160 points since the market opened as investors hope that the end of the Iran war may be in sight.

That relief was felt across bond markets, with gilt yields falling sharply as investors started to scale back their expectations for interest rate hikes.

Markets now expect one 25 basis-point increase by the end of the year and a possible second, compared with an anticipated two or three hikes previously.

Five-year gilt yields were down around 11 basis points to 4.358, while 10-year yields were down 9 basis points to 4.819 per cent.

Berkeley shares have plummeted 17 per cent to 2,838 after a sobering update to investors.

The housebuilder said it had reduced investment and halted new land acquisition as it battles higher costs and increased macroeconomic volatility. It highlighted the 'unprecedented increase in cost and regulation'.

Chris Beauchamp, chief analyst at IG said: 'The warnings about the UK economy continue to filter through, Berkeley being the latest to sound the alarm.

'While it remains on track to hit targets, the move to reduce investment and halt new land acquisition is a sign of a company pulling up the drawbridge to await better times. While sensible, it has given investors a new reason to abandon the shares, sending them to a decade low in early trading.'

Retailer Topps Tiles has plunged more than 8 per cent this morning after it announced plans to close 23 of its stores.

It said it would help to 'offset government and macro-driven cost inflation' and a softer DIY market.

London's blue-chip index has opened up 1.08 per cent, or 110 points, to 10,287, on optimism that the Iran war will end soon.

The FTSE closed 48 points higher on Tuesday, and is up just over 2 per cent in the year-to-date.

Brent crude is hovering at $100 a barrel once more.