Bank of England Governor Andrew Bailey acknowledged that prices did not fall as quickly as the bank expected. Photo: TOLGA AKMEN/EPA-EFE/Shutterstock
Andrew Bailey suggested that high supermarket prices were due to food producers “recovering” their profits as the Bank of England acknowledged that its models failed to predict a surge in inflation.< /p>
Mr. Bailey, the bank's governor, said producers are not missing the fall in raw material prices after a peak last summer.
This means that prices have not fallen as fast as the Bank expected, he added, and food inflation jumped to a new high of 19.1% in March. meeting with Chancellor Jeremy Hunt to discuss why prices remain so high.
Speaking to MPs on the Treasury Select Committee, Mr. Bailey said: “Our agents are starting to collect margin information… this is a story about margin recovery , which declined especially last year.”
He added that this is not the same as speculation.
Food prices are rising
Mr. Bailey also acknowledged that there are “very important lessons” for the Bank to learn from its failure to keep inflation under control.
His comments follow the Bank's latest monetary policy report, which included the biggest revision of GDP forecasts in the history of the Bank.
At the time, Mr. Bailey admitted that he underestimated the strength of the economy, and the Bank pointed to problems with its modeling, which is based on data from the past 30 years – period when there was no comparable inflationary shock.
Mr Bailey again addressed MPs, saying Threadneedle Street failed to foresee the extent to which food producers were forced to keep prices higher because they negotiated contracts such as energy contracts in advance. costs were greater.
He said, “It should have been possible to determine.”
Separately, food manufacturers were summoned to meet with the Chancellor to explain why buyers are still facing with attractive prices at the box office.
Tensions between grocery store executives and their suppliers have been mounting over a lack of widespread price cuts.
Earlier this month, supermarket bosses were called to a meeting with the government over allegations of speculation, which they deny.John Allan, then chairman of Tesco, suggested earlier this year that some suppliers could take advantage of inflation to push prices higher.
However, the big food producers dismissed the claims and are believed to have told the Chancellor on Tuesday that they are swallowing up most of the cost increase rather than passing it on to supermarkets.
1205 Bank GDP Forecast
Food and Beverage business executives have urged ministers to put new rules on hold in areas such as waste recycling, as it is expected to result in additional costs to their business.
The Treasury Department said it has agreed to further discussions between food industry leaders and senior ministers on “potential measures that government and industry can take to ease pressure on consumers.”
Anecdotal data from Kantar suggests that shoppers are all are still spending significantly more on essentials, including milk and eggs, despite supermarkets' recent efforts to cut costs.
Grocery prices jumped 17.2 percent in the 12 weeks to May 14, the third highest inflation rate since 2008.
Grocers cited the recent price decline as a sign that they are moving to push discounts for customers as soon as they see them from their suppliers.
According to Kantar, the average price of four pints of milk in the last month has dropped by about 8p over the last month. all major supermarkets to cut prices in response to falling wholesale prices. Still, that's 30p more than last year.
Kantar's Fraser McKewitt said: the door.
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