{"id":597585,"date":"2026-05-22T07:27:25","date_gmt":"2026-05-22T07:27:25","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/597585\/"},"modified":"2026-05-22T07:27:25","modified_gmt":"2026-05-22T07:27:25","slug":"bank-of-england-governor-says-food-price-freezes-are-unsustainable","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/597585\/","title":{"rendered":"Bank of England governor says food price freezes are \u2018unsustainable\u2019"},"content":{"rendered":"

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The Bank of England\u2019s chief has warned potential supermarket price controls<\/a> were \u201cnot sustainable\u201d<\/a> in the long run.<\/p>\n

Bank governor Andrew Bailey<\/a> told MPs<\/a> on the Treasury Committee<\/a> that UK interest rates<\/a> may have been cut twice this year and inflation also may have fallen to its 2 per cent target level last month, but the energy shock from the Iran war<\/a> was keeping the cost of living higher.<\/p>\n

The conflict has been the \u201cdominating change in the landscape\u201d for the economy, he said.<\/p>\n

\"BankBank of England governor Andrew Bailey said the energy shock was keeping the cost of living higher (PA Wire)<\/p>\n

His comments come after reports the government had urged retailers to limit costs<\/a> on staples such as eggs, bread, and milk, potentially in exchange for eased regulations.<\/p>\n

The governor said: \u201cIf you start doing it as a matter of course then effectively you\u2019re artificially moving prices relative to costs and that\u2019s not a sustainable thing in the long run.<\/p>\n

\u201cThere may be benefits to doing it in the short term but it does need to be thought through.\u201d<\/p>\n

A government minister denied plans for price caps but confirmed that it is holding talks with supermarkets amid concerns over rising inflation.<\/p>\n

Supermarket executives on Wednesday dismissed suggestions of the price caps on essential food items<\/a> as “completely preposterous” and “idiotic”.<\/p>\n

M&S boss Stuart Machin said he had received “no direct communication” regarding the reported proposals.<\/p>\n

He told reporters: “It\u2019s completely preposterous. I don\u2019t think the government should be trying to run business.”<\/p>\n

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Interest rates were held at 3.75 per cent last month, which the governor said was sensible due to the \u201cunpredictability of events in the Middle East\u201d.<\/p>\n

Mr Bailey added: \u201cIt was a reasonable expectation prior to this all happening that we would probably cut once or twice this year, the market was pricing that.<\/p>\n

\u201cThe market isn\u2019t pricing that now and effectively that was taken off the table.<\/p>\n

\u201cEffectively we\u2019ve tightened policy because we\u2019ve removed the expectation of a cut, before you start talking about what happens next.\u201d<\/p>\n<\/p>\n

Mr Bailey told the committee that two key considerations for the Bank were how long the conflict goes on for, and to assess the potential \u201clasting damage that has been done to the energy supply infrastructure\u201d.<\/p>\n

Official figures published on Wednesday showed Consumer Prices Index (CPI) inflation fell to 2.8 per cent in April, from 3.3 per cent in March.<\/p>\n

Mr Bailey said the data showed \u201csurprisingly benign food price inflation\u2026 which was a little bit contrary to what we were expecting\u201d.<\/p>\n

But he cautioned over higher oil prices having a \u201cdelayed reaction\u201d on energy bills, adding: \u201cThe inflation number we had this morning reflected the fact the Ofgem cap came down in April \u2013 we know it\u2019s going to go up in July.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Your support helps us to tell the story From reproductive rights to climate change to Big Tech, The…\n","protected":false},"author":2,"featured_media":597586,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-597585","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/597585","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=597585"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/597585\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/597586"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=597585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=597585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=597585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}