The Bank of England boss issued a warning about “apocalyptic” food price rises around the world.
Andrew Bailey cited the COVID pandemic and war in Ukraine as factors it could not have predicted.
He also suggested that workers should not ask for a pay raise.
The governor of the Bank of England issued a stark warning of “apocalyptic” rises in the price of food, while suggesting workers should not ask for a pay rise.
Andrew Bailey told MPs of the Treasury Select Committee that a “very big income shock” from the increase in the global prices of goods would hit demand in the economy and push up employment.
Difficulties in shipping out supplies from Ukraine due to Russia’s 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 last six weeks.
On top of the war, China’s ongoing COVID-19 wave was another factor putting pressure on prices, Bailey said.
“There’s a lot of uncertainty around this situation,” Bailey said.
“And that is a major, major worry and it’s not just, I have to tell you, a major worry for this country. There’s a major worry for the developing world as well … Sorry for being apocalyptic for a moment, but that is a major concern.”
Bailey also reiterated his calls for employees not to seek pay rises despite the rising costs, in an apparent reference to the idea that wage increases could lead to more inflation.
The governor, who is paid £575,000 a year, said: “I do think people, particularly people who are on higher earnings, should think and reflect on asking for high wage increases.”
“It’s a societal question. But I am not preaching about this. I was asked if I have taken a pay rise myself this year and I said no, I had asked the bank not to give me one, because I felt that was the right thing for me personally.
“But everybody must make their own judgement on that. It’s not for me to go around telling people what to do.”
The bank has previously warned that inflation in the UK could hit 10% by the autumn, well above its 2% target. Policymakers also warned that the UK economy could contract for the last three months of the year, raising fears of a recession.
Earlier this month it hiked interest rates to 1% from 0.75% — the highest level since 2009 — in a bid to stem inflation.
Treasury Select Committee chair and former Treasury minister Mel Stride accused the bank of having been “asleep at the wheel.”
But Bailey insisted the vast majority — around 80% — of the pressures were being caused by issues outside his control, such as the war.
“I don’t think we could foresee a war in Ukraine,” he told MPs.
Figures published by the Office for National Statistics on Tuesday showed a 1.2% drop in regular pay for the first quarter of the year.
Liberal Democrat MP Christine Jardine said: “These figures confirm families are facing a cost of living nightmare, with wages failing to keep up with soaring energy bills and food prices.
“It is the worst possible time to be raising taxes on struggling families, yet still the chancellor [Rishi Sunak] is ploughing ahead.”
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