Brits must accept they are poorer after Covid and the energy crisis and stop chasing big pay rises, a Bank of England chief has warned.
Chief economist Huw Pill risked fury as he warned that the refusal to ‘take our share’ of the pain was generating inflation.
The comments emerged after figures showed food inflation still running at an eye-watering 17 per cent – with families struggling to get by.
Bank governor Andrew Bailey previously came under fire after he suggested people should be shunning pay rises to help curb inflation.
Mr Pill, a former Goldman Sachs banker with a six-figure salary, was speaking on the Columbia Law School Beyond Unprecedented podcast.
He pointed to the impact of huge global energy price increases, falls in the value of the Pound, and supply chain pressures after Covid.
‘If the cost of what you’re buying has gone up compared to what you’re selling, you’re going to be worse off,’ he said.
‘So somehow in the UK, someone needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices, whether higher wages or passing the energy costs through onto customers.
‘And what we’re facing now is that reluctance to accept that, yes, we’re all worse off, and we all have to take our share.’
Mr Pill said that people ‘try and pass that cost on to one of our compatriots’.
‘That pass the parcel game that’s going on here… that game is generating inflation, and that part of inflation can persist.’
Markets are pricing in more rate hikes by the Bank of England within weeks after annual CPI came in higher than expected at 10.1 per cent in March.
Although the figures was down from 10.4 per cent in February, analysts had expected a drop to 9.8 per cent after huge energy bill increases last spring fell out of the index. Instead the biggest surge in food prices since 1977 – especially affecting bread and cereal – offset the benefits.