London (UK)- According to the Bank of England’s governor, the war in Ukraine is threatening Britain’s food supplies, with shortages of cooking oil affecting British supermarkets.
Senior Conservatives have called for more aggressive action to combat rising living costs, as Bank of England Governor Andrew Bailey stated that he had reached the limit of his ability to assist households.
In testimony to the Treasury Select Committee on Monday, he reiterated his warning to workers not to seek higher pay raises, citing the risk of escalating inflation by triggering a wage-price spiral.
The shortages of Ukrainian wheat, and cooking oil made from the country’s produce, was a “major worry” for Britain, Mr Bailey told MPs.
“One is the risk of a further energy price shock, which would result from the cutoff of gas and distillates, such as diesel,” he said. Then there’s food, which may make me sound rather ominous.
“The [Ukrainian] finance minister said two things: there is food in the store, but they can’t get it out.” While he was upbeat about crop planting, he admitted that as a significant wheat and cooking oil supplier, we have no way of shipping it out, deteriorating the situation. It is an essential concern for this country [the UK] and the developing world.”
Last year, Ukraine supplied more than 11% of the UK’s cooking oil imports, raising the prospect of shortages if the country cannot export its goods. While Britain imports only a small amount of Ukrainian wheat, a lack would significantly impact global prices.
When asked if he still believes workers should avoid asking for raises this year, Mr Bailey said, “I think people, particularly people on higher earnings, should think and reflect on asking for high wage increases.”
“It’s a societal issue.” But I’m not going to preach about it. Everyone must make their own decision on this. It is not my place to tell people what to do.”
Ministers are expected to announce additional “non-fiscal measures” to help lower living costs – such as reducing business regulation – as early as this week. Still, Rishi Sunak wants to wait until later in the year to present a new package of spending and tax cuts.
Veteran Brexiteer Michael Fabricant, on the other hand, urged the Chancellor to accelerate a planned increase in the level of benefits, saying: “I believe this is necessary as the rate of inflation due to the war in Ukraine and the embargo on Russian oil has caused world grain and fuel prices to soar.”
“People on the verge of going hungry cannot afford to wait until later this year.”
Conservative backbencher Alec Shelbrooke proposed that the government intervene in energy markets and buy gas to keep consumer prices low.
“That is not what you’d consider traditional Conservative party thinking by any stretch of the imagination,” the MP for Elmet and Rothwell in West Yorkshire told the BBC’s Westminster Hour. “But the situation we are in now is so dire and is likely to get a lot worse… Do we have to throw everything into the air and develop new ideas?”
To better align consumer prices with changes in wholesale markets, Ofgem plans to review the price cap level every three months rather than every six months as it currently does.
Campaigners warned that the move would result in faster cost increases for households.