Bank of England on UK inflation
Inflating prices could increase the cost of living even more and hurt the least well-off, the Bank of England governor has warned companies.
“If all costs try to defeat inflation, we will get higher inflation,” Andrew Bailey said to the BBC’s Today programme.
Bank of England governor talks about UK’s inflation:
He stated higher inflation “hurts people” and alerted the Bank would increase rates again if prices continued to grow. Mr Bailey spoke a day after the Bank inflated interest rates to their maximum level for 14 years.
The move came after prices increased unexpectedly last month.
“I would say to citizens setting costs – please understand, if we get inflation entrenched, interest rates will have to drive up further, and higher inflation helps nobody,” he continued.
Skyrocketing inflation in the UK and worldwide has squeezed families’ finances as energy and food prices increase.
Cost of living forces hit the least well-off hardest because they spend a more significant amount of their earnings on food and fuel. The Bank has been steadily raising interest rates to make borrowing funds more expensive and enable people to spend less to prevent prices from rising quickly.
But higher interest rates also shot some people with current loans such as mortgages. Mr Bailey said companies should remember that the inflation rate will probably fall sharply this year.
He said he had not yet seen proof of firms putting up costs more than required and understood they needed to “reflect the prices they face.”
Replying to Mr Bailey’s warning, Martin Williams, chief director of Rare Restaurants, which has the chains Gaucho and M, said businesses had already been denied in increasing prices.
“If diners had reflected the increased ‘costs they face’ in the last year, as Mr Bailey points, a simple side salad would be priced at £20,” Mr Williams said, continuing that beer would be £20 per pint, and a small steak would be £100.
