The governor of the Bank of England today warned that an “apocalyptic” rise in food prices is on the cards due to the war in Ukraine.
Andrew Bailey said Russia’s invasion had led to a global shortage of wheat and cooking oil, which was driving up prices.
He said the potential for further food price inflation was a “major worry” for the central bank.
“Ukraine and Russia is the big risk in a way,” he told the Treasury select committee.
“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.”
The Bank of England has forecast a sharp slowdown in UK growth in the latter part of 2022 and has increased interest rates to one per cent in a bid to dampen rising inflation.
It also recently made significant alterations to its inflation forecasts, predicting that it will hit 10 per cent this year.
However, there is growing frustration among Tory MPs and ministers that the Bank of England did not move quickly enough to attempt to curb soaring inflation.
Some Cabinet ministers have “turned on” the bank and suggested it is failing to “get things right”, according to the Sunday Telegraph.
Senior ministers told the paper the bank had one job to do to “keep inflation at around two per cent” while another said government figures were “now questioning its independence”.
Bailey told MPs he did not believe the central bank could have acted differently, adding: “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.”