Pill Sounds Alarm on Inflation Risks Amid Energy Price Surge

Bank of England Chief Economist Huw Pill has expressed concerns about potential inflationary pressures in the British economy. He warned that the recent surge in energy prices, triggered by the Iran war, could lead to a gradual build-up of long-term inflation pressures.

Pill, who dissented from the BoE's 6-3 majority decision to keep interest rates on hold, noted that it was 'good news' that the increase in energy prices had not led to a significant erosion of public trust in the Bank's 2% inflation target.

However, he cautioned that it would be difficult to determine until later this year whether 'more slow-moving but maybe more insidious second-round effects' were developing as businesses and workers sought to recoup inflation-driven losses.