The Bank of England’s ability to forecast food inflation has come under fire from Helen Dickinson OBE, the head of the retail industry’s largest trade body. She warns that price rises in supermarkets are not yet in the rearview mirror despite last week’s interest rate cut.
The chief executive of the British Retail Consortium (BRC), said leading indicators in the commodity market mean another bout of food inflation in the next six months looked likely.
“The Bank of England isn’t that great at forecasting what might happen to retail goods,” Dickinson told City A.M. “I think the complexity of retail supply chains is not well built into the Bank of England’s models of how they forecast what the outlook for inflation is.”
While monthly shop price inflation data published by the BRC last week showed that the rate of price increases in July remained unchanged at 0.2 per cent, she felt that the Bank needed to stay focused on where food prices could head next.
“While commodity input costs came down at the end of last year, they started to go back up this year, and those will take six months to feed through,” she said.
“Renewed inflationary pressures are lurking over the horizon.”
The Bank declined to comment.