The governor of the Bank of England, Andrew Bailey, warned about the possibility of raising interest rates again, highlighting that food and energy costs remain a risk for inflation. In a speech to the British National Farmers Union, he emphasized the bank’s attention to signs of persistent inflation that could require a rate hike.
His words refuted expectations of rate cuts by the Bank of England, defying a bleaker economic outlook and the risk of recession. Bailey warned of a possible further rise in food inflation, even into double digits, due to climate change, protectionism and the impact of the conflict in the Middle East on energy prices.
He insisted that it is early to consider cuts, pointing to high service inflation and strong wage growth, possibly influenced by the 30% rise in food prices since the start of the pandemic, generating more wage pressures along with energy costs. .
Bailey warned of future volatility in food bills, despite an expectation of reduced food inflation. Although it has fallen from a peak of 20% at the beginning of the year, it is still in double digits.
Bank of England adviser Swati Dhingra also urged consumers to prepare for further increases due to climate change and geopolitical tensions. The decline in food prices, along with lower energy bills, helped reduce inflation to 4.6% in October, its lowest level in more than two years.
