The possibility of more food price rise is a “major worry” for the UK and other countries, the Bank of England governor has warned while apologising for sounding “apocalyptic”.
Bank Of England governor Andrew Bailey said the war in Ukraine was affecting food supplies.
“There’s a lot of uncertainty around this situation,” Bailey said.
“And that is a major, major worry and it’s not just I have to tell you a major worry for this country. There’s a major worry for the developing world as well. And so if I had to sort of, sorry for being apocalyptic for a moment, but that is a major concern.”
Bailey warned that price rises in food and energy would have a much bigger effect than any rise in interest rates. He also defended the Bank’s performance following criticism it has not done enough to try to rein in rising prices. The bank recently raised interest rates with rates rising to 1 percent from 0.75 percent earlier this month, their highest level since 2009 and the fourth consecutive increase since December.
Inflation – the rate at which prices rise – touched a 30-year high level for March while April figures- due to be out on Wednesday (17)- is expected to rise further. The Bank has warned inflation could hit 10 percent by the autumn, well above its 2 percent target.
Bailey warned that a “very big income shock” from the increase in global goods prices would hit demand in the economy and push up unemployment.
He also said that difficulties shipping out food supplies from Ukraine could hit world supplies of wheat and cooking oil.
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