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Appeal to higher-income workers: Bank of England boss Andrew Bailey
Photo: Frank Augstein/AP
The head of the British central bank has clearly warned consumers of an inflation spiral.
Rising energy and food prices would fuel inflation even more while triggering a "very large real wage shock," Bank of England boss Andrew Bailey said at a hearing in a parliamentary committee in London.
Ultimately, unemployment will rise again.
In the first three months of the year, unemployment in Britain fell to 3.7 percent, the lowest level since 1974.
In the first quarter, salaries including bonus payments increased by 7.0 percent compared to the same period last year.
According to experts, millions of people in the country could slip into poverty and debt because of rising prices, especially for food and energy.
Inflation had recently climbed to 7 percent in Great Britain, and the inflation rate is expected to rise to 9.1 percent in April.
The Bank of England expects consumer prices to rise by up to 10.25 percent this year.
In its fourth hike in just six months, the Bank of England raised interest rates by a quarter of a point to 1.0 percent at the beginning of the month.
Key interest rates have not been this high in the UK since 2009.
The central bank could not have done otherwise, Bailey assured.
"We can't predict things like wars, it's in no one's power." When asked if he felt helpless to do anything about rising inflation, Bailey said, "Yes." Income - up, they should "think and reflect" before demanding wage increases and fueling inflation further.
According to market research firm Kantar, food inflation in the UK reached 5.9 percent in April, the highest level since December 2011. Retailer Marks & Spencer told Reuters that it expects food inflation to rise later this year year could reach ten percent.
"Sorry to be apocalyptic"
The head of the Bank of England named the war in Ukraine as an important reason for the rise in food prices.
The country is one of the main exporters of wheat and sunflower oil.
Ukraine has sufficient stocks but cannot export the goods, Bailey said.
"It is a major concern for this country and a major concern for developing countries," the central bank governor said, according to British media.
"Sorry to be apocalyptic, but that's a big problem."
dam/mmq/dpa-AFX/Reuters
