Bank of England Governor Andrew Bailey said there’s some signs that fuel sellers are charging too much for petrol in the UK and that government action to curb unfair practices will help bring down inflation.
(Bloomberg) — Bank of England Governor Andrew Bailey said there’s some signs that fuel sellers are charging too much for petrol in the UK and that government action to curb unfair practices will help bring down inflation.
“If you look at petrol, some sellers of petrol possibly have been charging too much for it,” Bailey said in an interview with CBBC aired on Thursday. “It’s just fairer if these things are tackled. These things are having very difficult effects. It’s important that these steps that can be taken to make things fairer and to save money for people can be taken.”
The comments mark a shift away from the BOE’s previous assessment that there’s not much evidence of “greedflation” where companies take advantage of rising prices to charge even more.
The Competition and Markets Authority has raised questions about whether supermarket forecourts are ripping off customers by charging an extra 6 pence a liter or fuel last year. The government is backing a new “pump watch” price comparison site to enable drivers to access live, station by station fuel prices on mobile devices to boost competition.
Inflation, Bailey said, is still “far too high” above the BOE’s 2% target, although it should fall sharply this year. The remarks were for the CBBC channel aimed at children, and the section about petrol prices played out on BBC Radio 4’s “Today” program.
“It is true throughout the world really that younger people tend to borrow more money and as we all get older, we tend to have more saving,” Bailey said in an interview on Newsround on the CBBC channel.
“That tends to be the way people’s life cycles work so it will have more of an effect on young people (and) younger families. I do understand this.”
The remarks point to growing concern over the cost of living crisis and higher interest rates being felt most by younger generations, particularly those who have recently got onto the property ladder. Many older households have paid off their mortgage and are even benefiting from higher saving rates.
Mortgage rates have surged in recent months after surprisingly sticky inflation fueled a flurry of bets on the BOE pushing ahead with more rate rises. Investors are wagering on rates climbing above 6%, up from 5% currently.
Bailey said that inflation will get back to the BOE’s 2% target toward the end of next year.
“It’s already started to come down and I expect quite a marked fall in inflation,” he said.
But he added that the BOE will have to put up rates by even more if it does not get a handle on prices.
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