London Daily

Focus on the big picture.
Monday, Jun 23, 2025

Potential for UK to experience persistent inflation, Bank of England chief economist says

Potential for UK to experience persistent inflation, Bank of England chief economist says

UK distinctive in facing three economic challenges at the same time, Huw Pill says.
Inflation may prove to be more persistent in the UK than other countries, the Bank of England's chief economist has said.

The Bank has been consistently raising Bank rate in an effort to bring double digit inflation down to its 2% target.

While it is expected, by financial markets, that it will peak at 4.25% in May, Mr Pill's comments may signal willingness to raise rates higher or for longer if inflation is not responding.

The UK's high gas prices, high employment with high demand but short supply of workers, and supply chain problems has created a "distinctive context that prevails in the UK", Huw Pill said.

These issues create "the potential for inflation to prove more persistent", Mr Pill said at an event of the Money Market Association of New York University.

The UK is "distinctive" in facing three economic difficulties at the same time, Mr Pill said.

While energy prices have risen globally - fuelled by Russia's invasion of Ukraine and the ensuing rush away from Russian gas - the UK and Europe have had "significant adverse terms of trade shock", he said.

These include disruptions to natural gas and food supplies and resulted in much higher levels of European wholesale prices, he added.

Another of the problems Mr Pill identified was the need to tackle the inflationary labour market conditions being experienced in the UK and US.

Finally he said third issue being faced by the UK, which made it distinctive, was weaning off financial supports initiated during the global financial crisis and the pandemic.

Inflation is said to have peaked but remains high.

However, the Bank of England's own estimates have inflation forecast to drop from the middle of this year as energy prices come down for businesses and households and the extension of the Energy Price Guarantee until April 2024.

But Mr Pill warned that inflation could become entrenched as the large energy prices experienced by consumers and businesses "trigger the infamous second round effects in price, wage and cost dynamics".

"The dynamics that threaten to create persistence in inflation even after the original external stimulus abates - is greater when the corporate sector enjoys pricing power, and the labour market is tight."
Newsletter

Related Articles

0:00
0:00
Close
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
×