BoE chief risks fury as he says Brits must accept they are poorer after Covid and energy crisis and stop chasing big pay rises to keep up with soaring inflation
- BoE chief economist Huw Pill has been speaking about inflation on a US podcast
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.
Bank of England chief economist Huw Pill risked fury as he warned that the refusal to ‘take our share’ of the pain was generating inflation
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
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.
Inflation is now at the same level as it started the year, having been in double-digits since September and reaching an eye-watering 41-year high of 11.1 per cent in October.
The price rises are far outstripping wages, even though they have also been rising fast.
Figures today showed the cost of groceries at supermarkets have dipped slightly from last month’s 17.5 per cent.
But analysts at Kantar warned that this only meant prices were not increasing as quickly after ten months of double-digit growth.
Own label sales were up 13.5 per cent year on year, with the very cheapest value lines soaring by 46 per cent, the research by analysts at Kantar found – with branded sales up 4.4 per cent while prices have risen fastest for staples including eggs, milk and cheese.
The data also found UK grocery sales rose 8.1 per cent over the four week period year-on-year.
It comes as online grocer Ocado said it would shut its oldest distribution centre in Hatfield, Hertfordshire this year amid a shift towards robotic warehouses, in a move affecting around 2,300 workers.
Bank governor Andrew Bailey previously came under fire after he suggested people should be shunning pay rises to help curb inflation
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