Bank of England Governor warns of ‘apocalyptic’ food prices

The Bank of England Governor, Andrew Bailey, has warned of “apocalyptic” food prices, with further sharp increases expected as a result of the war in Ukraine.

Referring to the effect of the invasion of world supplies, he said that the war had resulted in a global shortage of wheat and cooking oil that would continue to drive up prices.

The bank has predicted that inflation will hit 10 per cent this year and is forecasting a sharp slowdown in economic growth. That has led to the bank increasing interest rates to one per cent, but some believe that was too slow and not enough.

Speaking to MPs on the Treasury Select Committee he said that the potential for further inflation in food prices was a “major worry” adding that “Ukraine and Russia is the big risk in a way.”

Bailey continued, saying: “One is the risk of a further energy price shock, which would come from the cutting off of gas and distillates, such as products like diesel.

“And then, the one which I might sound rather apocalyptic about, is food.

“Two things the [Ukrainian] finance minister said is that there is food in store, but they can’t get it out.

“While he was optimistic about crop planting, as a major supplier of wheat and cooking oil, he said we have no way of shipping it out and that is getting worse.

“It is a major worry for this country and a major worry for the developing world.”

Support for the governor is however waning with a growing frustration amongst MPs that the bank did not move quickly enough to deal with the inflation problem, with the bank’s forecasts originally far lower than what has proven to be the reality.

According to the Sunday Telegraph, some ministers “have turned on the bank” suggesting that it is “failing to get things right.”

That has led to some questioning the bank’s independence, with it failing to get the one job it has right, which is to keep inflation below two per cent.

Bailey has defended the bank, telling MPs that he did not believe the central bank could have acted differently.

He said: “As you say, there have been a series of supply shocks and most recently with the impact of the war, Russia’s invasion of Ukraine.

“We can’t predict things like wars – that’s not in anybody’s power.

“I don’t think we could have done anything differently; we could not have seen a war with Ukraine.

“There is also a further leg of Covid, with the situation in China, which appears to be affecting the country more seriously.”

Some ministers have since questioned the Bank of England Governor’s use of the word ‘apocalyptic’ when forecasting food prices, with Northern Ireland secretary Brandon Lewis telling Sky News that prices do move either direction, but apocalyptic?

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