Brexit : Bank of England warns rising inflation will hurt UK’s poor

Governor of the Bank of England Mark Carney hosts his quarterly Inflation Report press conference at the Bank of England in central London, August 4, 2016. (Photo by AFP)

The Bank of England has warned that life will turn difficult for Britain’s most vulnerable, as inflation is expected to rise due to a slump in the pound following the vote to exit the European Union.

Mark Carney, the Governor of the Bank of England, said Friday that inflation was likely to surpass the bank’s official two-percent target over the coming years.

Carney said that the bank was “willing to tolerate a bit of an overshoot” to avoid unnecessary employment.

He added it was not the bank’s responsibility to make decisions based on uneven social impacts of higher prices. “We care a lot about distribution but we are not a political entity,” he said, according to The Independent.

Carney said that around 500,000 jobs could have been at risk if the bank had not cut interest rates in August.

The pound sterling has fallen by about 18 percent since Britain’s vote to exit the EU (Brexit) in June, the lowest level in 168 years. The Bank of England has signaled it may cut interest rates again later this year.

The British currency has fallen as foreign investors wait for signs of the UK’s new trading agreements with the rest of the world.

Food and Drink Federation Director General Ian Wright says the cost of importing goods is rising, and businesses will have to pass these costs on to consumers or risk losses.

“If these price hikes persist, there are pretty undesirable possible outcomes: retailers put up prices, manufacturers and or retailers take the hit, or consumers lose choice,” Wright told The Times.

The Bank of England’s forecast in August show inflation hitting two percent in the third quarter of 2017 and rising to 2.4 percent in the second half of 2018.

Some economists predict prices will rise even more rapidly. Some expect inflation will hit three percent by the end of next year as imports of food and fuel become more expensive.