Huw Pill, chief economist at the Bank of England, took an unequivocal approach last month to explaining the realities of life amid rising inflation, saying people simply must accept that they are now worse off than they were before. But after heavy criticism, Bell apologized for his remarks this week — sort of.
The pill has been criticized before Other economistsunions and even boss last month after he described inflation as a game of “pass the package” during a podcast interview Produced by Columbia Law School. He explained that companies raising their prices or individuals demanding higher wages were passing on the effects of inflation to the broader economy, rather than simply accepting the fact that they were poorer than before.
“If what you buy costs more than what you sell, you will be worse off,” he said. “So somehow in the UK someone needs to accept the fact that they are worse off and stop trying to preserve their real purchasing power by raising prices.”
I tried pills to make up during Virtual Q&A session Monday evening, as he acknowledged his word choice was less than ideal. But while he took responsibility for his “flaming” remarks, he also painted himself as a messenger with the difficult task of conveying a reality that is almost impossible to shake.
“If I had the chance again to use different words,” he said, “I would use somewhat different words to describe the challenges we all face.”
“Although we do have some messages that are hard to bring up. I will try to bring them up in a way that is probably less exciting than I have been able to in the past.”
UK annual inflation currently 10.1%with Food and drink prices It’s particularly high at 19%, so it’s no surprise that last month’s pill comments fell largely flat-ears. Even Andrew Bailey, the governor of the Bank of England, stepped up last week to reassure Britons that the central bank is “very sensitive to the situation of the people, all the people, but especially the low-income people.” He also admitted that Bell’s choice of words “wasn’t the right one”.
“I have to be honest and I think he’ll agree with me,” said Bailey.
In his apology on Monday, Bell said he and the central bank were well aware “that we live in difficult, challenging times,” while acknowledging that the problems of high inflation were “particularly acute for some parts of society.”
But he also reiterated that part of his job was to reveal these hard truths to the public. Bell insisted that it was “important” to communicate messages about the realities of inflation “in a coherent and robust manner”, while also noting that the “viral response” of his previous response was not helpful in managing the central bank’s connection to inflation.
Bell’s comments highlighted the debate in both the UK and the US about how central banks should deal with inflation. While Bill and the Federal Reserve Chairman Jerome Powell Some critics have pointed to rising wages as a major cause behind inflation, and some critics have cited excess corporate profits as the main cause, a phenomenon known as “greedy inflation”.
The greedy inflation argument goes that companies are using current inflation and other factors such as the pandemic and the war in Ukraine as a cover to drive up their prices and increase their profit margins. Katherine Mann, a senior official at the Bank of England, warned in March that British companies could be so to exploit The cost of living crisis to raise profits, while March Stady By Unite, the country’s largest private sector trade union, it found that average profit margins in the UK rose to 10.7% in the first half of 2022 from 5.7% in the first half of 2019.
However, the greed inflation narrative has been disputed by other British economists. Michael Saunders, chief economic adviser at Oxford Economics and central bank interest rate setter, shared his own analysis of the company’s earnings in a note to clients this week that notes Most companies were experiencing declining profits. Outside of oil and gas companies, “the share of company earnings in GDP has declined significantly,” Saunders wrote, adding that the recent spike in food price inflation was likely due to “usual sluggishness rather than profiteering.”
