Bank of England policymaker warns of ‘greedflation’ risk to consumers
A senior Bank of England policymaker has expressed concern that UK companies could be exploiting the cost of living crisis to push through inflation-busting price increases – a phenomenon widely known as “greedflation”.
Catherine Mann, one of the nine members of Threadneedle Street’s monetary policy committee, said she was concerned about the ability of firms to take advantage of consumer willingness to tolerate higher prices.
In an interview with Bloomberg, Mann said the pricing power of companies meant bringing down the UK’s annual inflation rate to its 2% target would require interest rates to rise further from their current 4% level.
The Bank of England has been closely monitoring pay levels for signs of a developing wage-price spiral but Mann’s comments reflect growing anxiety about the risk posed by corporate greedflation – where businesses more than pass on higher costs to customers – although she did not use that specific term. The European Central Bank expressed similar concerns last week.
The headline rate of inflation has come down slightly from a peak of 11.1% to 10.1%,according to the latest official figures, but Mann said she was more focused on core inflation – which strips out items such as food and fuel.
The rate setter said she was particularly “concerned about the extent to which there is strong pricing power among firms and acceptance of those price rises by a lot of consumers”. Even in the face of the cost of living crisis, Mann added, there were “still a lot of people out there who are willing to pay higher prices, and firms are willing to set their prices high”.
Mann said she felt vindicated after calling for interest rates to be raised faster in 2022, arguing that a “front-loaded” policy would have been
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