Inflation warning from BOE Chairman – Bloomberg HT

Andrew Bailey, Governor of the Bank of England (BOE), warned that higher food prices and a tight labor market could cause the cost of living crisis to continue.

Bailey said the UK was “unshakable” in its commitment to the 2 percent inflation target.

Speaking at the Annual Global Conference of the British Chambers of Commerce on Wednesday, Bailey said inflation will fall sharply from the current 10.1 percent “in the coming months” as lower energy costs help reduce the rate of price increase.

Bailey said the UK economy has passed its biggest test ever during the inflation targeting regime. He noted that food price inflation is still extremely high and there is uncertainty about how long it will take to reflect on consumer prices.

Saying that the tight labor market also increased inflationary pressures, Bailey added that employees are trying to compensate for their lost purchasing power by raising their salaries.