Inflation, which is already expected to climb above 10% at the end of the year in the United Kingdom, could exceed this level if Ukraine cannot export its crops, warns the governor of the Bank of England Monday.
Faced with a British parliamentary committee, Governor Andrew Bailey apologized for describing an apocalyptic situation to explain the risks that could lead to inflation once again exceeding the forecasts of the monetary institute.
Ukraine is a major producer of wheat and vegetable oil, which has ample food reserves but cannot bring them out of the country, he commented.
This is a major concern for our country and for developing countries, he insisted: Any effort that would allow Ukraine to get its food out of the country would be very important in controlling inflation.
The price of wheat reached a new record on the European market on Monday, after India announced an embargo on its grain exports.
The governor was fielding questions from British MPs amid mounting criticism of the Bank of England, which raised rates four times to 1% but barely limited inflation.
The institute has one job to do, to keep inflation below 2%, and it’s hard to remember when it last achieved that goal, a member of the UK government told the Sunday Telegraph.
What do you say to those who say you fell asleep and drove and should have done more sooner? asked Tory MP Mel Stride, head of the Treasury Committee in the UK Parliament to start the BoE hearing.
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Mr. Bailey and the other members of the BoE’s Monetary Policy Committee present repeatedly said that 80% of inflation was due to rising energy prices, boosted by Russia’s invasion of Ukraine. .
The remaining 20% can be explained in particular by a very tight labor market in the United Kingdom, over which there are many uncertainties.
There is an element of long-term illness, which we don’t know much about. Is the Covid long? Are people who suffer from other long-term illnesses reluctant to join the world of work with the risk of Covid-19? It is possible, Mr. Bailey argued.