Bank warns interest rates will rise again if firms hike prices

Bank of England brag Andrew Bailey has warned businesses that raising prices risks embedding ostentation successful the UK and hurting the "least good off".

"If each prices effort to bushed ostentation we volition get higher inflation," Mr Bailey told Radio 4's Today Programme.

He warned involvement rates would emergence again if prices continued to increase.

The Bank has been steadily expanding involvement rates arsenic it seeks to marque borrowing wealth much costly and promote radical to walk less, with the purpose of stopping prices rising truthful quickly.

Mr Bailey said firms should carnivore successful caput that ostentation is apt to driblet sharply this year.

He said helium had not yet seen grounds of companies putting up prices much than necessary, and said that helium understood they needed to "reflect the costs they face".

But helium warned firms that if precocious ostentation became "embedded" successful the UK economy, past the Bank would request to act,

"Higher ostentation truly benefits nobody," helium said. "It hurts people, and it peculiarly hurts the slightest well-off successful society."

Reacting to Mr Bailey's warning, Martin Williams, main enforcement of Rare Restaurants, which includes the chains Gaucho and M, said that businesses had already been restrained successful raising prices.

"If restaurants had reflected the accrued 'costs they face' successful the past twelvemonth arsenic Mr Bailey suggests, a elemental broadside crockery would beryllium priced astatine £20," Mr Williams said.

He said restaurateurs were "sensitively trying to support eating retired affordable, and not suffer wealth successful doing so," contempt surging wage, nutrient and vigor measure costs.

Mr Bailey's comments came aft Tesco president John Allan, said successful January nutrient firms whitethorn beryllium utilizing ostentation arsenic an excuse to hike prices further than necessary.

The complaint astatine which prices are rising remains adjacent to its highest level for 40 years - much than 5 times the Bank's target.

Higher nutrient prices are 1 of the main drivers fuelling wide inflation, with the outgo of mundane basics specified arsenic eggs, food and beverage rising sharply.