Pill Warns of Insidious Inflation Pressures Amid Energy Price Surge

Bank of England Chief Economist Huw Pill expressed concerns about the potential for inflation pressures to build up in Britain's economy. He stated that the recent jump in energy prices, triggered by the Iran war, could lead to a gradual increase in long-term inflation pressures.

Pill noted that it was good news that the surge in energy prices had not led to a substantial deanchoring of public trust in the BoE's 2% inflation target. However, he warned about the possibility of second-round effects developing as businesses and workers seek to recoup inflation-driven losses.

According to Pill, these effects would be slow-moving but potentially more insidious. He stated that it wouldn't be possible to tell until later in the year whether these effects are indeed emerging.