The Governor of the Bank of England, Andrew Bailey, has warned there is “very real income shock” coming from “apocalyptic” food prices but stood by the Banks policy decision.
According to Bailey, he felt “helpless” as he defended the Bank of England’s monetary policy despite households being impacted by soaring inflation.
Bailey told MPs at the Treasury Select Committee yesterday that UK consumer demand will be impacted by current inflation, which is the highest in over three decades.
According to The Office for National Statistics inflation the rate of inflation which sat at 7% in March, is expected to rise over 8% inflation for last month.
As a result, BoE has said inflation is likely to peak at 10.25% during the final quarter of 2022.
“The Ukrainian finance minister said is that there is food in store but they can’t get it out,” he told MPs.
“While he was optimistic about crop planting, as a major supplier of wheat and cooking oil, he said we have no way of shipping it out and that is getting worse.
“It is a major worry for this country and a major worry for the developing world.
“Sorry for being apocalyptic but that is a major concern.”
In March, UK food inflation increased by 5.9% and is expected to accelerate in the coming months.
He added: “The main driver of inflation and what brings it down is the very big, real income shock which is coming from outside forces and, particularly, energy prices and global goods prices,” Bailey told MPs.
“That will have an impact on domestic demand and it will dampen activity, and I’m afraid it looks like it will increase unemployment.”