Bank of England governor Andrew Bailey has warned of "apocalyptic" food prices in the UK and around the world caused by Russia’s invasion of Ukraine.
Speaking to MPs to defend the Bank’s actions in dealing with a rate of inflation that is expected to rise from 7% to 9% for last month, he argued that the bank did not move too slowly.
“We can't predict things like wars - that's not in anybody's power," he said, placing the blame on “a series of supply shocks coming one after another” such as Ukraine and the lockdowns in China.
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Bailey said his worries about food supplies had been raised after speaking to Kyiv’s finance minister at last month’s IMF meeting.
“He said he was optimistic about crop planting, but at the moment there was no way of shipping the food out, and it’s getting worse,” Bailey said.
“That’s not just a major worry for this country, but a worry for the developing world. I’m sorry for being apocalyptic, but it is a worry.”
Many countries rely on exports of Ukraine’s wheat and cooking oil, with the situation getting worse this week as India banned exports of wheat, citing food security.
Investors are focused on soaring prices of wheat and other soft commodities, said market analyst Naeem Aslam at AvaTrade, saying this could make the ongoing inflation situation even more challenging.
"India’s ban on wheat exports has sent ripple waves throughout the markets, even though India isn’t even the largest producer of wheat.
"Investors and traders are worried that the ongoing conflict between Ukraine and Russia has disturbed the global supply chain of soft commodities, and now countries like India have started to secure their future food supply by banning the export of the essential soft commodity.
"So far, the conflict between the US and Russia over Ukraine has brought us higher energy prices. Now it seems like the actual impact of this conflict has started to filter through, which is likely to cause even bigger panic than anyone has anticipated."