Andrew Bailey, the governor of the Bank of England, has appealed to businesses to avoid price rises but expressed confidence that the rises in the cost of living would slow sharply in the summer.
Speaking on BBC Radio 4’s Today programme, he admitted that inflation had been higher than expected, after it rose to 10.4% in February.
Companies should set prices in a way that do not embed inflation at current levels because it could hurt people and would mean higher interest rates, he said.
"If all prices try to beat inflation then we will get domestic inflation that will start repeating itself. Higher inflation really benefits nobody and particularly hurts the least well-off in society."
Bailey said he has not seen evidence of profiteering by companies but other policymakers are worried that after the pandemic and Brexit businesses face less European competition, which makes the UK more inflation-prone.
Last year, Bailey called for restraint on pay rises, sparking a backlash from unions.
Stock markets are in the red again, with the FTSE 100 index down 67 points, or 0.9%, at 7,431.
Germany’s Dax has lost 133 points, or 0.9%, to 15,076, while France’s Cac fell 65 points, or 0.9% to 7,072 and Italy’s FTSE MiB has tumbled 309 points to 26,173, a 1.2% drop.
Crude oil prices have also fallen, with Brent crude, the global benchmark, down 0.4% at $75.59 a barrel.
The pound is trading 0.3% lower against the dollar at $1.2250 but has edged up 0.1% versus the euro to €1.1353.
While French protests over plans to raise the pension age from 62 to 64 continue, as more than a million took to the streets yesterday and Bordeaux town hall was set on fire, there’s some good news on the French economy today.
Strong services activity growth in March has led the French economy to expand at the fastest pace since May, according to a closely watched survey from S&P Global. Its purchasing managers’ index for the private sector was above the 50 mark that divides growth from contraction for a second month, and rose to a 10-month high.
The agenda
• 9am GMT: eurozone S&P Global PMIs flash for March
• 9.30am GMT: UK S&P/CIPS Global PMIs flash for March
• 12.30pm GMT: US durable goods orders for February
• 1.45pm GMT: US S&P Global PMIs flash for March
• 4pm GMT: Bank of England policymaker Catherine Mann speaks
We’ll be tracking all the main events throughout the day ... |
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