BoE's Bailey says inflation outlook uncertain, but jobs mkt cooling
By Frank Prenesti
Date: Thursday 26 Jun 2025
(Sharecast News) - The recent rise in UK inflation had introduced more uncertainty about the near-term outlook for price rises, particularly food, said Bank of England Governor Andrew Bailey.
In a speech to the British Chambers of Commerce, Bailey added that there were signs of a cooling in the jobs market and wage growth.
"We have to monitor very closely how this plays out. Some of the regulated and administrative prices could change again. And we have to ensure that second-round effects do not take hold," he said.
"Also on our watch list is food price inflation, which has risen materially, from 3.0% to 4.4% in May. The prices of meat, chocolate and non-alcoholic drinks have gone up the most, consistent with higher wholesale prices for beef, cocoa beans and coffee."
Bailey noted that evidence in recent months indicated that "slack is opening up has strengthened, especially in the labour market".
"With moderate growth and a softer labour market, a wider margin of slack in the UK economy will support continued disinflation in the domestic economy and a gradual return of headline inflation to the 2% target as we look beyond the near-term increase."
Bailey said the direct impact of the US global trade war "may be smaller than we might have feared", but cautioned that the uncertainty associated with it "nevertheless continues to have an impact on the UK economy".
"There have been significant moves in the oil price following the escalation of the conflict in the Middle East, although not always in the direction we may intuitively have expected. That only goes to show the unpredictability of events in the world today."
Reporting by Frank Prenesti for Sharecast.com
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