Andrew Bailey told MPs yesterday (16 May) that rises in inflation were being driven by a series of external shocks including Russia’s war in Ukraine and supply chain issues caused by lockdowns in China.
Prices are rising at the fastest rate in 30 years, with a risk of double-digit inflation before the end of the year.
Bailey said that Ukraine, one of the world’s major producers of wheat and cooking oil, was struggling to export food while the conflict continued.
“[An inflation risk factor] I am going to sound apocalyptic about is food,” Bailey told MPs on the Treasury select committee.
“Ukraine does have food in store but can’t get it out at the moment.”
Farmers in Ukraine have been able to plant crops this spring but have no way of shipping it out, he continued.
“That is a major worry not just for this country but for the developing world.
“I am by no stretch of the imagination a military strategist, but whatever can be done to help Ukraine get its food out would be a huge contribution.”
Ukraine is the world’s biggest exporter of sunflower oil and has suffered steep drops in exports of grain including wheat and maize since the Russian invasion.
Moscow has been accused by western politicians of burning Ukraine’s grain stocks and deliberately damaging its ports to stop the government earning vital foreign export revenues.
Ukraine’s grain exports have plunged to about 500,000 tonnes a month, down from five million tonnes before the war and resulting in $1.5bn in lost income, according to Kyiv’s agriculture ministry.
The latest CGA Prestige Foodservice Price Index, published last week, showed that year-on-year inflation in the foodservice sector hit 13.6% in March 2022 - the highest figure in the history of the Index