(Bloomberg) --

Bank of England Governor Andrew Bailey warned of a potentially “very damaging” period of inflation for British consumers as the resumption of pre-pandemic spending habits puts pressure on supply chains. 

In an interview with the Yorkshire Post, Bailey said U.K. inflation would exceed the bank’s previous forecasts. A flurry of news last week undercut the BOE’s original view that much of the jump in prices will prove transitory, and comes amid growing bets that spiking inflation will force the BOE to hike interest rates in the near future.

“Obviously I am concerned with inflation above target,” Bailey said in comments published on Saturday. “We have got to, in a sense, prevent the thing becoming permanently embedded because that would obviously be very damaging.” 

His comments come after the BOE’s new Chief Economist Huw Pill said earlier this week that the current spike in inflation in the U.K. will last longer than originally thought. Markets are almost fully pricing in a 15 basis-point rate rise by the end of the year.

“This has been an almost unprecedented set of events,” Bailey said. “They are not over yet, that we are learning. We have to manage our way through them, and we will do that.” 

U.K. Says Food and Fuel Shortages Are Hitting Many Consumers

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