BANK of England boss Andrew Bailey has admitted that inflationary pressures stretch into next year – longer than he first thought.
The Bank’s governor told MPs on the Treasury Select Committee that financial markets now do not expect energy prices to start easing back until the the second half of 2023.
Until a few months ago, wholesale gas prices had been expected to start falling next summer.
He said it was a “big shift” and suggested it may impact the Bank’s previous insistence that higher levels of inflation would be only temporary.
Part of the change in gas price expectations is down to rising tensions between Russia and Ukraine, he added.
He told MPs: “I have to be honest with you, that’s a very great concern.”
Mr Bailey also said oil prices have jumped 12 per cent since the start of January.
He added that the cost of living crisis that households face this year could bring down inflation on its own in the longer term, by depressing demand and causing a rise in unemployment as people have less money in their pockets to spend.