BOE's Governor: There is evidence some retailers are overcharging customers

Bank of England Governor Andrew Bailey has voiced concerns about certain retailers overcharging customers, adding to the mounting pressure faced by the sector as authorities grapple with the highest inflation rate among the world’s affluent economies.

In an interview with the BBC, Bailey highlighted the significance of regulatory actions on retail prices, particularly in the fuel market, as a means to alleviate inflationary pressures.

Bailey stated, “That’s important. It helps us with inflation, but it’s just fairer if these things are tackled. This is having very difficult effects.” The Governor’s comments come amidst criticism directed at the Bank of England regarding its strategy for addressing the surge in price growth.

Last week, British Finance Minister Jeremy Hunt held discussions with regulators to explore measures aimed at safeguarding consumers from overpaying and extending assistance to those facing payment difficulties. Additionally, competition regulators revealed that motorists who purchased fuel at supermarkets last year ended up paying more due to significant margin increases by major supermarket chains.

During the interview, Bailey reiterated the urgency for prompt action by the Bank of England to curtail inflation, cautioning against the potential repercussions of high interest rates in the future. However, he refrained from speculating on the timeline for a reduction in borrowing costs.

“I can’t give you a date as to when interest rates start to come down because that really depends upon what happens over the period of time ahead, but getting inflation down is the most important thing that we have to do,” Bailey affirmed.

He further added, “It (inflation) has already started to come down and I expect… quite a marked fall in inflation, we’ll notice it. What we have to do is set the interest rate to get it all the way down to 2%.”

Notably, British inflation reached a 41-year high of 11.1% in October 2022 and remained at 8.7% in May, surpassing the rate in the United States twofold and considerably exceeding that of the eurozone. The ongoing struggle to tame inflation has prompted heightened concerns among policymakers and consumers alike.