The Governor of the Bank of England has warned there is “very real income shock” coming from energy prices and “apocalyptic” food prices but stood by the Bank’s policy decisions.
Andrew Bailey said he felt “helpless” as he defended the bank of England’s monetary policy despite households being battered by soaring inflation.
Mr Bailey told MPs at the Treasury Select Committee on Monday that UK consumer demand will be impacted by current inflation, which is the highest in 30 years, and this is expected to cause higher unemployment.
The Office for National statistics recorded inflation at 7% in March and later this week is expected to unveil over 8% inflation for last month.
The Bank of England has said inflation is likely to peak at 10.25% during the final quarter of 2022.
“The main driver of inflation and what brings it down is the very big, real income shock which is coming from outside forces and, particularly, energy prices and global goods prices,” Mr Bailey told MPs.
“That will have an impact on domestic demand and it will dampen activity, and I’m afraid it looks like it will increase unemployment.
📣 On Monday, we’re taking evidence from the @bankofengland on the May 2022 Monetary Policy Report
💬 Topics are likely to include the outlook for the economy and inflation, and the impact of interest recent rate rises
📺 Watch live here from 3.15pm 👇https://t.co/Q9tKKtk3Ln
— Treasury Committee (@CommonsTreasury) May 13, 2022