Bank of England says energy-driven inflation spillovers remain subdued in UK
Rising energy costs are not yet showing broad second-round effects across British prices, according to comments from Bank of England Governor Andrew Bailey in Bangkok. He says the evidence remains limited for now, underscoring that it is still too early to draw firm conclusions about wider inflation pressures.
Highlights
- Bank of England Governor Andrew Bailey stated that so far, spillover effects from surging energy prices on UK inflation remain restrained.
- Bailey noted at the Institute of International Finance in Bangkok that available evidence shows second-round inflation pressures are 'quite subdued' at present.
- The Bank of England sees no broad-based UK price acceleration from energy cost increases yet, but will continue monitoring for persistent inflation signals.
Bailey flags limited pass-through so far
As reported by Reuters, Bailey says the broader impact of surging energy prices on UK inflation appears restrained so far, based on the evidence seen to date.Speaking at a meeting of the Institute of International Finance in Bangkok on Friday, the Bank of England governor says it is still too early to make a definitive assessment. He says that, to the extent evidence is available, second-round inflation pressures look "quite subdued".
The IIF meeting is taking place on the sidelines of the annual meetings of the International Monetary Fund and World Bank.
Implications for UK inflation outlook
Bailey's comments suggest energy cost increases are not yet feeding strongly into a wider range of British prices, a key issue for monetary policymakers assessing whether temporary shocks risk becoming more persistent.For businesses and markets, the remarks point to a UK inflation picture where headline pressure from energy is not currently translating into broad-based price acceleration across the economy, although the Bank of England is still watching for clearer evidence before drawing firmer conclusions.
In our earlier coverage of the Bank of England’s assessment of the UK energy price shock, Deputy Governor Sarah Breeden said the economy had absorbed higher energy costs better than initially expected. She pointed to supportive fiscal policy and Bank of England actions as factors that helped steady markets, while noting that inflation and market volatility remain key risks requiring close monitoring.
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