Bank of England boss warns of ‘apocalyptic’ food price hikes

  • Bank of England boss warned of ‘apocalyptic’ food price hikes around the world.
  • Andrew Bailey cited the COVID pandemic and the war in Ukraine as factors he could not have predicted.
  • He also suggested that employees should not ask for a raise.

The governor of the Bank of England sharply warned of “apocalyptic” rises in food prices, while suggesting that workers should not ask for a raise.

Andrew Bailey told MPs from the Treasury Select Committee that a “very large income shock” from the rise in world prices of goods would affect demand in the economy and boost employment.

Difficulties in shipping supplies from Ukraine due to the Russian invasion could hit world supplies of wheat and cooking oil, he added. Ukraine is a major producer of both and global wheat prices have already risen by 25% in the past six weeks.

In addition to the war, the ongoing COVID-19 wave in China was another factor depressing prices, Bailey said.

“There is a lot of uncertainty about this situation,” Bailey said.

“And that’s a big, big concern and it’s not just, I have to tell you, a big concern for this country. There’s also a big concern for the developing world… Sorry to be apocalyptic for a moment, but that’s a great care.”

Bailey also reiterated his call on workers not to ask for wage increases despite rising costs, in a clear reference to the idea that wage increases could lead to more inflation.

The governor, who will be paid £575,000 a year, said: “I think people, especially those with higher incomes, should think and think about asking for high pay raises.”

“It’s a social issue. But I’m not preaching about that. I was asked if I’d taken a raise myself this year and I said no, I asked the bank not to give it to me, because I thought it was the right thing to do.” was thing for me personally.

“But everyone has to make their own judgment about that. It’s not up to me to tell people what to do.”

The bank previously warned that inflation in the UK could reach 10% by the autumn, well above the 2% target. Policymakers also warned that the UK economy could contract in the last three months of the year, raising fears of a


recession

Earlier this month, it raised interest rates to 1% from 0.75% – the highest level since 2009 – in a bid to contain inflation.

Mel Stride, chairman of the Treasury Select Committee and former Secretary of the Treasury, accused the bank of ‘sleeping behind the wheel’.

But Bailey insisted that the vast majority – about 80% – of the pressure was caused by things beyond his control, such as war.

“I don’t think we can foresee a war in Ukraine,” he told MPs.

Figures released Tuesday by the Office for National Statistics show a 1.2% decline in regular wages for the first quarter of the year.

Liberal Democrat MP Christine Jardine said: “These figures confirm that families are facing a cost of living nightmare, with wages failing to keep up with rising energy bills and food prices.

“It’s the worst possible time to raise taxes on struggling families, but still the chancellor [Rishi Sunak] plows forward.”

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