The governor of the Bank of England told MPs that Britain faced “great concern” about the “doomsday” global food price rise caused by Russia’s invasion of Ukraine.

Andrew Bailey warned of a “huge income shock” to households, and admitted to feeling “helpless” in the face of rising inflation.

His comments come as veteran Tory MP Michael Fabricant called on Chancellor Rishi Sunak to raise benefits in line with inflation and as the energy regulator raised concerns about plans to amend gender price limits on bills every three months instead of every six. .

Mr. Bailey defended the Bank’s monetary policy and said food costs could rise further if Ukraine, a major agricultural exporter, is unable to ship wheat and cooking oil from its warehouses due to blockaded by Russia.

“Sorry it’s apocalypse, but it’s a big concern,” Mr Bailey said on Monday, noting that wheat prices have risen by just under 25% in six weeks. via.

Mr Bailey said Britain was in a “bad situation” with inflation. The cost of living has been driven by a range of global factors, he noted, which the bank’s valuers could not have foreseen.

These include the war in Ukraine and the Chinese government’s latest response to the wave of Covid-19 infections in the country, including severe, economically damaging shutdowns. The result was a sharp and sudden rise in global energy prices, driving up the cost of living in the UK.

“I don’t feel happy about this at all; This is a potentially dire situation,” said Mr Bailey, noting that inflation is expected to peak at 10% later this year.

He was responding to questions from Treasury Select Committee Chairman Mel Stride MP about whether he would “fall asleep at the wheel” as interest rate pressures mount.

Mr Bailey said around 80 per cent of inflationary thrust in the UK was being driven by global circumstances. “There’s not a lot that we can do, about 80 percent of it,” he added. “We have to recognize the reality of the situation we face.”

Another factor, which is among the remaining 20% ​​of the problems affecting price growth, is the reduction in the post-pandemic workforce.

“The scale and persistence of the drop is highly unusual,” Mr. Bailey said.

Inflation – the rate at which prices increase in the economy – currently stands at 7% and the Bank of England predicts it could hit 10% this year. This compares with the Bank’s 2% target, which is central to the Bank’s important mission, often referred to as “price stability”.

A senior minister said of the Bank: “It has a job to do – keep inflation at around 2% – and it’s hard to remember the last time it hit its target.”

The second added that senior figures “are now asking questions [the Bank’s] independence”, hinting that some may see a case of greater political influence for the Bank, was declared independence by Gordon Brown in a move announced shortly after he became prime minister. in 1997.

However, when there are signs of weakening consumer confidence, the Bank may have to combine the need to contain inflation with the need to avoid a recession. This is because higher interest rates can often act as an engine of economic growth.

Earlier this month, the Bank warned that severe tightening of household living standards was likely to trigger a sharp recession.

Ahead of Monday’s session, Ed Smith, co-chief investment officer at Rathbone Investment Management, said the UK recession outlook is worse than in other major economies. As a result, the Bank is more likely than its international counterparts, including the US Federal Reserve, to “stop tightening earlier than investors expected.”

“Changes in government spending and taxes are more of a headwind in the UK than they are in the US. Meanwhile, the cost-of-living squeeze is more acute in the UK, and UK households have not amassed similar savings during the acute phase of the pandemic,” he said.

Mr Smith added: “Consumer confidence in the UK has also fallen recently and there are some worrying signs of weakness in consumer-related data, such as sales. retail and new car registration.

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