London Daily

Focus on the big picture.
Thursday, Dec 25, 2025

Inflation likely to hit 5%, warns Bank of England chief economist

Inflation likely to hit 5%, warns Bank of England chief economist

The Bank of England's new chief economist has warned that UK inflation is likely to hit or surpass 5% by early next year.

Huw Pill told the Financial Times that the Bank would have a "live" decision to make at its next interest rate-setting meeting on 4 November.

It follows recent comments from Bank of England governor Andrew Bailey who said it "will have to act" on inflation.

The UK interest rate has been at a historic low of 0.1% since March 2020.

Recent data showed that inflation growth slowed to 3.1% in the year to September. However, it is expected to increase because of rising energy costs, higher wages to fill record vacancy numbers and supply chain disruption.

Mr Pill, who succeeded the Bank of England's former chief economist Andy Haldane last month, said he would "not be shocked" to see inflation reach 5% or above in the coming months.

He told the Financial Times: "That's a very uncomfortable place for a central bank with an inflation target of 2% to be."

Huw Pill became the Bank of England's chief economist in early September

While Mr Pill declined to say how he would vote when the Bank's interest rate-setting Monetary Policy Committee meets early next month - stating "it is finely balanced" - he said: "I think November is live."

Separately, a survey of consumers found that a high proportion of them expect inflation to rise over the next 12 months.

GfK, the market research group, said that 48% of people it surveyed in October think inflation will accelerate, compared with 34% in September.

Joe Staton, client strategy director at GfK, said: "More and more shoppers expect that costs for goods and services will jump dramatically in the next 12 months.

"This rapid increase will impact our ability to shop and save, and our willingness to spend, at a time when our incomes are outpaced by inflation."

'Tough time'


Tony Brown, chief executive of New Start 2020, which owns Beales department stores, told the BBC's Today programme that retailers were facing higher costs, some of which were being passed on to shoppers.

He said that the cost of a container to ship goods into the UK had risen from about $2,000 (£1,450) a year ago to $18,000.

"The wholesalers are passing those costs onto us," said Mr Brown.

He said that, for example, the cost price of a vacuum cleaner had risen from £49 last year to £79.

"So that cost price has to be passed on, we can't absorb it," Mr Brown said. "We are passing on a proportion of that and having to take a hit on the rest, so it does dilute margins.

"It is a tough time for retail out there and I think what we need more than anything is some sort of calmness in the supply chain."

Some of the world's biggest food producers have also said they have been increasing prices of their products to cope with rising raw material costs, as well as higher energy price and supply chain difficulties.

Unilever, which makes PG Tips, Cornetto, Marmite and Dove skin care, said it had lifted prices and expects that to continue into next year.

The Times reported that Unilever said the cost of palm oil, which the company uses in soap and moisturisers, had risen by 82% over two years because of labour shortages in Indonesia.

 Palm oil prices have increased because of a labour shortage in Indonesia

Poor crop production of soya bean oil in Brazil, which is used in food, has also led to higher prices.

Kraft Heinz, which makes tomato ketchup and baked beans, recently warned that people will have to get used to higher food prices.

And Nestle revealed this week that it too had increased prices, which rose by 2.1% in the third quarter.

The maker of Kit-Kats, Nescafé and Purina pet products said prices had risen on the back of higher energy and raw materials costs, as well as transport.

Newsletter

Related Articles

0:00
0:00
Close
UK Mortgage Rates Edge Lower as Bank of England Base Rate Cut Filters Through Lending Market
U.S. Supermarket Gives Customers Free Groceries for Christmas After Computer Glitch
Air India ‘Finds’ a Plane That Vanished 13 Years Ago
Caviar and Foie Gras? China Is Becoming a Luxury Food Powerhouse
Hong Kong Climbs to Second Globally in 2025 Tourism Rankings Behind Bangkok
From Sunniest Year on Record to Terror Plots and Sports Triumphs: The UK’s Defining Stories of 2025
Greta Thunberg Released on Bail After Arrest at London Pro-Palestinian Demonstration
Banksy Unveils New Winter Mural in London Amid Festive Season Excitement
UK Households Face Rising Financial Strain as Tax Increases Bite and Growth Loses Momentum
UK Government Approves Universal Studios Theme Park in Bedford Poised to Rival Disneyland Paris
UK Gambling Shares Slide as Traders Respond to Steep Tax Rises and Sector Uncertainty
Starmer and Trump Coordinate on Ukraine Peace Efforts in Latest Diplomatic Call
The Pilot Barricaded Himself in the Cockpit and Refused to Take Off: "We Are Not Leaving Until I Receive My Salary"
UK Fashion Label LK Bennett Pursues Accelerated Sale Amid Financial Struggles
U.S. Government Warns UK Over Free Speech in Pro-Life Campaigner Prosecution
Newly Released Files Shed Light on Jeffrey Epstein’s Extensive Links to the United Kingdom
Prince William and Prince George Volunteer Together at UK Homelessness Charity
UK Police Arrest Protesters Chanting ‘Globalise the Intifada’ as Authorities Recalibrate Free Speech Enforcement
Scambodia: The World Owes Thailand’s Military a Profound Debt of Gratitude
Women in Partial Nudity — and Bill Clinton in a Dress and Heels: The Images Revealed in the “Epstein Files”
US Envoy Witkoff to Convene Security Advisers from Ukraine, UK, France and Germany in Miami as Peace Efforts Intensify
UK Retailers Report Sharp Pre-Christmas Sales Decline and Weak Outlook, CBI Survey Shows
UK Government Rejects Use of Frozen Russian Assets to Fund Aid for Ukraine
UK Financial Conduct Authority Opens Formal Investigation into WH Smith After Accounting Errors
UK Issues Final Ultimatum to Roman Abramovich Over £2.5bn Chelsea Sale Funds for Ukraine
Rare Pink Fog Sweeps Across Parts of the UK as Met Office Warns of Poor Visibility
UK Police Pledge ‘More Assertive’ Enforcement to Tackle Antisemitism at Protests
UK Police Warn They Will Arrest Protesters Chanting ‘Globalise the Intifada’
Trump Files $10 Billion Defamation Lawsuit Against BBC as Broadcaster Pledges Legal Defence
UK Says U.S. Tech Deal Talks Still Active Despite Washington’s Suspension of Prosperity Pact
UK Mortgage Rules to Give Greater Flexibility to Borrowers With Irregular Incomes
UK Treasury Moves to Position Britain as Leading Global Hub for Crypto Firms
U.S. Freezes £31 Billion Tech Prosperity Deal With Britain Amid Trade Dispute
Prince Harry and Meghan’s Potential UK Return Gains New Momentum Amid Security Review and Royal Dialogue
Zelensky Opens High-Stakes Peace Talks in Berlin with Trump Envoy and European Leaders
Historical Reflections on Press Freedom Emerge Amid Debate Over Trump’s Media Policies
UK Boosts Protection for Jewish Communities After Sydney Hanukkah Attack
UK Government Declines to Comment After ICC Prosecutor Alleges Britain Threatened to Defund Court Over Israel Arrest Warrant
Apple Shutters All Retail Stores in the United Kingdom Under New National COVID-19 Lockdown
US–UK Technology Partnership Strains as Key Trade Disagreements Emerge
UK Police Confirm No Further Action Over Allegation That Andrew Asked Bodyguard to Investigate Virginia Giuffre
Giuffre Family Expresses Deep Disappointment as UK Police Decline New Inquiry Into Andrew Mountbatten-Windsor Claims
Transatlantic Trade Ambitions Hit a Snag as UK–US Deal Faces Emerging Challenges
Ex-ICC Prosecutor Alleges UK Threatened to Withdraw Funding Over Netanyahu Arrest Warrant Bid
UK Disciplinary Tribunal Clears Carter-Ruck Lawyer of Misconduct in OneCoin Case
‘Pink Ladies’ Emerge as Prominent Face of UK Anti-Immigration Protests
Nigel Farage Says Reform UK Has Become Britain’s Largest Party as Labour Membership Falls Sharply
Google DeepMind and UK Government Launch First Automated AI Lab to Accelerate Scientific Discovery
UK Economy Falters Ahead of Budget as Growth Contracts and Confidence Wanes
Australia Approves Increased Foreign Stake in Strategic Defence Shipbuilder
×