The chief economist at the Bank of England, Hugh Bell, stressed today, Tuesday, that the British must accept their declining purchasing power in the face of the historic cost of living crisis in order not to fuel inflation.
“While inflation has been caused by shocks outside the UK from the Covid pandemic and the war in Ukraine, it is also fueled by efforts by Britons to maintain their standard of living, as companies raise their prices and employees demand increases in salary,” Bell said.
“Somehow in the UK people have to accept that their situation has worsened and stop trying to preserve their real purchasing power,” Bell said.
The chief economist added: “The reluctance to accept that we are in a worse position, this breeds inflation.”
These statements come at the height of the cost of living crisis and with inflation remaining above 10%.
The Bank of England has raised interest rates 11 consecutive times since late 2021, in an effort to control consumer prices.
Bell also noted that monetary policy must remain tight enough to curb inflation, but warned that very high rates could cause significant damage to the economy.
The pound sterling lost 0.74% of its value against the dollar, reaching 1.2395 at 14:55 GMT today, Tuesday.