Prices in British shops will soar next year unless the war in Iran ends, the head of the Bank of England has warned.
Andrew Bailey said the rate of inflation will rise to nearly 5% – more than double the 2% target – unless a peace deal is agreed soon.
He was speaking as the Bank put up interest rates for the first time in more than three years in an attempt to slow down the rate of inflation, which is currently 3.5%.
The decision is a major blow to Andy Burnham’s hopes of tackling the cost of living crisis.
At its latest meeting, the Monetary Policy Committee (MPC) of the Bank of England decided to increase interest rates to 4% from 3.75%.
But Bailey said that could go even higher if the the war – which began in February when Trump gave the go-ahead for the US military to attack Iranian targets – continues.
He said: “Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes.
“But, unless the c...
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