Bank of England (BoE) Governor Andrew Bailey, speaking at the Henry Plumb Memorial Lecture, noted that while inflation has run far over the BoE’s main targets, signs are appearing that runaway prices, specifically in the food sector, are beginning to come to heel.
BoE Governor Bailey noted that overall inflation blew well past the UK central bank’s main 2% target, reaching a peak of 11.1% in October of 2022. Despite UK inflation receding to 4.6% at the latest data reading, there’s still plenty of ground to cover before reaching the 2% target once more, and Governor Bailey warns that it’s certainly too soon to “declare victory” over inflation.
Inflation in food and beverages climbed to 19.1% in March of 2023, contributing 2 whole percentage points to overall inflation. Bailey noted that food inflation is still above 10% as of October, and the BoE is hoping that food price growth will slow to 3% by the end of the short-term forecast cycle in March of 2024.
BoE Governor Bailey’s speech did little to galvanize Pound Sterling (GBP) markets, and the GBP/USD pair continues to trade near the 1.2500 handle on Monday.