Bank of England Governor Andrew Bailey has warned businesses against raising prices excessively, stating that doing so 'hurts people' and could lead to higher interest rates. Speaking to the BBC's Today programme, Bailey emphasised that if all firms try to beat inflation, it will become embedded, making the cost-of-living crisis worse for the least well-off.
Bailey's comments came a day after the Bank raised interest rates to their highest level in 14 years. He urged companies to consider that inflation is expected to drop sharply this year, and that the Bank would raise rates further if necessary. However, he acknowledged that businesses need to reflect the costs they face and said he had not yet seen evidence of unjustified price increases.
Martin Williams, CEO of Rare Restaurants, which owns Gaucho and M restaurants, argued that businesses have already shown restraint. He warned that reflecting all cost increases would lead to exorbitant menu prices, potentially causing restaurant closures. UK Hospitality's chief executive Kate Nicholls echoed this, saying no business wants to raise prices for fear of losing sales, and that inadequate government support could result in business failures and job losses.
A government spokesperson highlighted the 'unprecedented' energy support package for firms, with further support from April. Bailey also commented on the UK banking system, calling it 'safe and sound' amid recent global banking turmoil, and noted that the risk of recession has 'gone down quite a lot'.
