Bank of England Sounds Alarm on Rising Global Inflation Risks

Deputy Governor of the Bank of England Sir Dave Ramsden has sounded the alarm on rising global inflation risks, shifting the bank's stance from a more balanced picture. The forces driving these risks are largely outside the UK's control, and multiple external pressures are converging at once.

The three major global forces contributing to elevated inflation are energy prices, supply chains, and an anticipated strong El Niño weather pattern for 2026-27. Ongoing conflicts in the Middle East continue to put upward pressure on oil and gas markets. Supply chains are still feeling the squeeze due to surging demand for AI-related components, particularly microchips.

The Bank of England's July 2026 Monetary Policy Report laid out the case in detail, highlighting these global forces that are conspiring to keep inflation elevated. The UK's Consumer Price Index inflation stood at 2.6% as of September 2026, above the bank's 2% target.

Ramsden acknowledged that there has been meaningful progress on domestic disinflation, with wage growth moderating and some post-pandemic price pressures fading. However, the MPC's assessment is that second-round effects should remain moderate for now, but the scales tip toward the upside in terms of inflation coming above forecast.