Bank of England chief Mark Carney warns inflation will soar HIGHER if we quit Europe without transitional deal as supermarket price rises hit four-year high
Bank of England chief Mark Carney has warned inflation could rise if Britain quits Europe without a transitional deal in place
Bank of England chief Mark Carney has warned inflation could rise if Britain quits Europe without a transitional deal in place.
It comes as the price of food and drink has soared to its highest level in four years.
Exiting the EU without such a deal in place could see a further fall in the value of the pound and push up prices and interest rates.
Mr Carney said he would ‘cast my vote’ for such an agreement to help companies and households to adjust.
The Governor of the Bank of England told the European Central Bank’s communications conference: ‘On the moment of Brexit, it will very much depend on what the final arrangement is with the EU 27 and what the transition path is from here to there.’
Mr Carney has pledged to do everything to keep the economy growing as Britain prepared to leave the European Union.
He said: ‘What are we trying to say to the people of UK? Very simple: We will do whatever we can to support the economy subject to returning inflation to that 2pc target – so don’t worry about inflation,’ he said.
‘And we will make sure the core of the financial system is resilient to whatever outcome [of the Brexit negotiations].’
He has previously said Britain would be ‘booming’ were it not for Brexit.
Mario Draghi, President of the European Central Bank (ECB) and Mark Carney, Governor of the Bank of England, in Frankfurt yesterday
It comes as it was revealed inflation stood at 3 per cent last month as measured by the consumer prices index, according to the Office for National Statistics.
The Bank of England sought to rein in inflation earlier this month by raising interest rates from 0.25 per cent to 0.5 per cent.
The Bank of England is meant to keep price rising steadily at 2 per cent, meaning the current level is far above its target.
However, this is largely because the pound fell after the Brexit vote, making it more expensive to buy goods from abroad.
A separate study released by research firm Kantar Worldpanel suggested that grocery prices are up 3.4 per cent in the past year, adding £143.70 a year to the typical family’s annual bill
On the rise: The price of butter, fish and cola have seen the fastest rises in recent weeks
Mr Carney said he was allowing inflation to remain high for longer than normal to avoid causing extra economic difficulties during the Brexit negotiations.
The inflation figures show that the price of food and non-alcoholic drinks was up 4.1 per cent, the fastest increase since September 2013.
However, inflation was reined in slightly by a drop in the price of motor fuel and furniture.
A separate study released by research firm Kantar Worldpanel suggested that grocery prices are up 3.4 per cent in the past 12 months, adding £143.70 a year to the typical family’s annual bill.
Inflation has remained at 3 per cent according to new figures put out by the Office for National Statistics. They said that inflation is mainly being driven by rising food prices, but this was off-set somewhat by a slight fall in fuel costs
The ONS figures show that the soaring cost of food and drink is helping to fuel inflation. Groceries hitting their highest levels in four years, up 4.2 per cent last month compared to a 3.4 per cent rise in September