4 2GM Tuesday May 17 2022 | the times
News
Britain faces an “apocalyptic” rise in
food prices caused by Russia’s invasion
of Ukraine as households are hit by a
“very real income shock”, the governor
of the Bank of England has warned.
Andrew Bailey told MPs he felt “very
uncomfortable” because rises in infla-
tion were being driven by a series of
external shocks, including the war and
supply chain issues caused by lock-
downs in China.
He said that Ukraine, one of the
world’s major producers of wheat and
cooking oil, was struggling to export
food while the conflict continued. “[An
inflation risk factor] I am going to
sound apocalyptic about is food,” Bailey
told MPs on the Treasury select com-
mittee. “Ukraine does have food in
store but can’t get it out at the moment.”
The governor said he had spoken in
Washington this month to Ukraine’s
foreign minister, who said that farmers
in the war-ravaged country were able to
plant crops this spring but “have no way
of shipping it out”.
Bailey said: “That is a major worry
not just for this country but for the de-
Workers should “think and reflect” on
whether to ask for pay rises because
they risk fuelling inflation, the gover-
nor of the Bank of England has said.
Speaking at the treasury select
committee, Andrew Bailey said there
was a “societal question” about whether
people should be pushing for pay rises.
Bailey, who earns £575,000 a year,
said that he had declined a pay rise. He
said: “My view — and I was asked about
this the other day — I do think people,
... but do you really need pay rise, asks governor on £575k
particularly people who are on higher
earnings, should think and reflect on
asking for high wage increases.
“It’s a societal question. I’m not
preaching about this. I was asked if I’ve
taken a pay rise myself this year and I
said no, I’ve asked the bank not to give
me one. I felt that was the right thing for
me personally.
“But everyone must make their own
judgment on that. It’s not for me to go
round telling people what to do.”
David Ramsden, deputy governor for
markets and banking at the Bank,warned that pay rises risked “embed-
ding” inflation in the economy. “Whe-
ther in wage bargaining but equally im-
portant in pricing of firms,” he said. “We
have to avoid that inflation mentality
which we’ve beginning to see signs of
taking hold.”
However, a trade union chief said
that the governor of the Bank of
England should not “lecture” workers.
Sharon Graham, Unite’s general
secretary, said: “Yet again workers are
being asked to pay the price, this time
for inflation and the energy crisis.“Why should they be expected to pay
for the failures of the energy market
and the total shambles of government
policy? Workers don’t need lectures
from the governor of the Bank of
England on exercising pay restraint.
Why is it that every time there is a cri-
sis, rich men ask ordinary people to pay
for it?
“Enough is enough, we will be de-
manding that employers who can pay,
do pay. Let’s be clear, pay restraint is
nothing more than a call for a national
pay cut.”Steven Swinford Political Editor
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referred itself to the watchdog
after a boy, three, was mauled to
death by a dog at a farm where
there had been incidents
involving the animals. Emergency
services were called to Carr
Farm, in Rochdale, at 1.15pm on
Sunday. The toddler was taken by
ambulance to hospital where he
was pronounced dead.Monkeypox warning
Four men in London have
contracted monkeypox, showing
it is being transmitted in Britain,
and bringing the number of
known cases to seven. Health
chiefs warned gay and bisexual
men to be particularly vigilant for
lesions or rashes. The illness is
usually mild and is spread by
close contact. The first reported
case had travelled to Nigeria.‘I’ll do Everest 17 times’
The British mountaineer Kenton
Cool, 48, said he has “a few more
Everests left” after reaching the
summit for a record-breaking
16th time at the weekend. He was
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A patient had to wait 24 hours in
an ambulance before they could
be handed over to A&E staff last
month, figures show. While there
was some improvement in delays
compared with March, 11,
patients waited three hours or
more. The target is 15 minutes or
less. Figures from the Association
of Ambulance Chief Executives,
reported by the Health Service
Journal, show a rise in the longest
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Cryptic clues page 10 of TimesMARTIN SHIELDS‘Apocalyptic’ surge in food prices
will hit Britain, warns Bank chief
veloping world.” Ukraine is the world’s
biggest exporter of sunflower oil and
has suffered steep drops in exports of
grain including wheat and maize since
the Russian invasion.
Moscow has been accused by west-
ern politicians of burning Ukraine’s
grain stocks and deliberately damaging
its ports to stop the government earn-
ing vital foreign export revenues.
Ukraine’s grain exports have plunged
to about 500,000 tonnes a month,
down from 5 million tonnes before the
war and resulting in $1.5 billion in lost
income, according to Kyiv’s agriculture
ministry.
Disruption to supply has also thrown
poorer countries reliant on Ukrainian
crops, such as Lebanon and Egypt, into
social and political turmoil. India
announced an export ban on wheat on
Saturday in response to global short-
ages driving up prices.
Inflation in Britain hit 7 per cent in
March and is due to pass 9 per cent
when official consumer prices index
figures are released next week, nearly
five times the Bank’s 2 per cent target
rate. The Bank’s rate setters expect in-
flation to peak at 10.2 per cent later thisyear, largely down to higher energy
prices driven by the war in Ukraine.
Bailey’s comments suggest that the
outlook for inflation could worsen if
Ukraine suffers further crop damage.
Russia, which accounts for a quarter of
global wheat exports, has also blocked
grain exports to neighbours. Wheat
prices hit a 14-year high in March.
The Bank of England raised interestrates to their highest since the financial
crisis at 1 per cent this month, but has
warned that 80 per cent of present in-
flationary pressures are driven by glob-
al factors beyond rate setters’ control.
Bailey said additional western sanc-
tions on Russia, such as a prospective
European Union oil ban, were unlikely
to stoke inflation further. “Further
energy price shocks are more [likely]
from cutting off natural gas and distil-late products. Crude oil isn’t so much an
issue, I think,” the governor said.
Higher inflation will be responsible for
the worst annual drop in income for UK
households since the 1950s.
Asked if he had been left feeling a “bit
helpless” by the impact of external fac-
tors on inflation, Bailey said: “It’s a very,
very, more than uncomfortable — I’m
trying to think of a word more severe
than that. To predict and forecast 10 per
cent inflation and say there’s not a lot
we can do about 80 per cent of it is
extremely difficult.”
Michael Saunders, who sits on the
Bank’s monetary policy committee,
said that he believed tighter monetary
policy would have done little to alter
the present rate of inflation.
Bailey also told MPs that he did not
think the Bank “could have done any-
thing differently” to avoid sharp price
rises. “There have been a series of sup-
ply shocks, most recently with the im-
pact of the war... We can’t predict
things like wars, that’s not in anybody’s
power.”
Bank duty to target inflation should not
be undermined, leading article, page 29
Bank ‘faces test of credibility’, page 33Mehreen Khan Economics Editor
Andrew Bailey told
MPs he felt “very
uncomfortable”
about inflationActress jailed for abuse
A Hollywood actress and her
husband have been jailed for
abusing a teenager. Zara
Phythian, 38, who starred in the
2016 film Doctor Strange, was
given eight years by Nottingham
crown court for sexually abusing
the girl, from when she was 13.
Victor Marke, 59, was jailed for
14 years for abusing her and
indecently assaulting another girl.