- Gemma Dempsey
- BBC News
Business leaders in Britain criticized the Governor of the Bank of England (British Central Bank), Andrew Bailey, following he declared that companies should think carefully before the decision to raise prices to counter inflation.
Bailey said that price increases may lead to an even higher cost of living and harm the poorest.
However Tim Martin, head of DJ Witherspoon’s bar chain, said bank managers were “keep an eye on” the owners.
UK Hospitality, the Confederation of UK Hospitality, said Bailey had ignored the “dire situation” facing many.
“If prices try to beat inflation, then inflation will increase,” the bank governor told the BBC’s “Today” programme.
Speaking a day following the Bank of England raised interest rates to their highest level in 14 years, Bailey said increased inflation was “hurting people” and warned that interest rates would rise once more if prices continued to rise.
“I would say to the people who set prices, please understand the fact that if we look at inflation, interest rates will have to go up even more, and high inflation won’t benefit anyone,” he added.
‘an unsettling experience’
However, Martin said that while companies “will want to follow the advice of (the governor of the Bank of England), not many will be able to do so” and warned of the possibility of a rise in prices at the pub chain.
“If the monetary costs of energy, labor and supplies rise and prices do not, then bank managers across the country will be keeping a close eye on companies, which is a troubling experience,” he said.
Martin added that he is looking forward to the moment when the “ferocious” inflationary pressures facing the sector as a whole abate.
The chain, which offers low-cost food and drinks and owns a network of 843 pubs across the UK and Ireland, reported a 5 percent increase in sales in the six months to January 29 compared to the same period in 2019.
The company’s figures reflect data previously announced by the British Retail Consortium (BRC), which showed a growth in sales in the retail sector to 6.3 percent, the highest level since March 2022.
Despite this, he said, rising inflation meant that sales volumes remained flat in the red.
The British Retail Consortium said that despite ongoing cost-of-living pressures, customers were still willing to spend on what they needed, with sales of clothing and cosmetics soaring.
The union added, “There are still challenges facing consumer spending in the coming months, with the end of the energy bill subsidy plan in April and the increase in the cost of borrowing.”
He said: “It is necessary for the government to avoid any additional regulatory burdens on companies that would impose a risk of raising prices, which increases pressure on the budget of consumers.”
“miracle”
Kate Nicholls, chief executive of the UK’s Confederation of Hospitality Businesses, said it was “a miracle” that so many companies would be reluctant to raise prices as long as they might.
“Suggesting that the sector should bear these massive cost increases ignores the real and dire situation facing businesses across the country,” she added.
A government spokesman said it had provided companies with an “unprecedented” package of energy subsidies, and would provide “more support from next April”.
