Bank of England governor warns firms raising prices ‘hurts people’

BBC: Raising prices could drive up the cost of living even further and would hurt the least well-off most, the Bank of England governor has warned firms.

“If all prices try to beat inflation we will get higher inflation,” Andrew Bailey told the BBC’s Today programme.

He said higher inflation “hurts people” and warned the Bank would raise rates again if prices continued to increase.
Bailey was speaking a day after the Bank raised interest rates to their highest level for 
14 years.

The move came after prices jumped unexpectedly last month.

“I would say to people who are setting prices - please understand, if we get inflation embedded, interest rates will have to go up further and higher inflation really benefits nobody,” he added.

Soaring inflation in the UK and around the world has been squeezing households’ finances as energy and food prices rise.

Cost of living pressures hit the least well-off hardest, because they spend a bigger part of their income on food and fuel.

The Bank has been steadily increasing interest rates as it seeks to make borrowing money more expensive and encourage people to spend less, with the aim of stopping prices rising so quickly.But higher interest rates also hit some people with existing loans such as mortgages.

Bailey said firms should bear in mind that the rate of inflation is likely to drop sharply this year.

He said he had not yet seen evidence of companies putting up prices more than necessary, and said that he understood they needed to “reflect the costs they face”.