{"text":[[{"start":10.48,"text":"War in Iran and the effects of extreme weather threaten to ignite a new burst of inflation, the Bank of England governor has warned, adding to the problems facing Andy Burnham’s government ahead of next month’s Budget."}],[{"start":22.08,"text":"Andrew Bailey told MPs on Tuesday that the near closure of the Strait of Hormuz, coupled with pressures on refining capacity, could lead to yet higher energy prices, fuelling volatility in global markets."}],[{"start":33.32,"text":"Drought in the UK and El Niño conditions around the world could also force the central bank to revisit its forecasts, he said. “Unfortunately, this is another area where the risks [to inflation] are on the upside,” he told the House of Commons Treasury select committee."}],[{"start":48.8,"text":"His words came after the UK government paid the highest borrowing cost on a debt sale in almost three decades, as inflation worries and uncertainty over the October 28 Budget pile pressure on Burnham’s new chancellor John Healey."}],[{"start":61.56,"text":"Addressing the Commons on Tuesday, Healey declined to rule out tax increases in his first Budget as he insisted he was committed to fiscal discipline."}],[{"start":69.88,"text":"Burnham has vowed to offer households “breathing space” with measures to ease the cost of living."}],[{"start":74.76,"text":"But he is grappling with a harsh economic inheritance as the conflict in the Gulf threatens to drive inflation to 3.2 per cent in the fourth quarter of the year, according to the BoE, compared with 2.9 per cent in July."}],[{"start":87.6,"text":"Bailey warned that continued disruptions to crude oil shipments, coupled with rising prices of refined oil products, could spur a further acceleration in inflation."}],[{"start":95.92,"text":"“We have higher energy prices — they could be higher still, I think,” he said. “The risks, I am afraid, are on the upside.”"}],[{"start":103.84,"text":"The BoE’s forecasts already factored in a rise in food inflation to about 3.5 per cent by the end of the year, but “we will keep having to come back to this to see if it’s consistent with what we’re seeing”, he added."}],[{"start":115.44,"text":"Bailey faced questions from MPs concerned that farmers were auctioning lambs earlier in the year than usual because drought conditions had affected pasture and led to shortages of feedstock."}],[{"start":125.6,"text":"The consultancy Capital Economics predicts that UK food inflation — which has slowed over the past year to reach a low of 1.3 per cent in July — will now start rising to peak at about 5 per cent next summer."}],[{"start":139.2,"text":"New forecasts from the Food and Drink Federation, published on Wednesday, suggested food inflation could rise to nearly 4 per cent by Christmas, averaging 5.5 per cent over the course of 2027."}],[{"start":152.44,"text":"The trade body said manufacturers turned out to have hedged more of their exposure to energy prices than expected, with long-term contracts covering more than half their needs."}],[{"start":162.52,"text":"Liliana Danila, FDF chief economist, said this would lead to a “prolonged plateau” in food inflation rather than a spike, with manufacturers also feeling the effects of the summer’s droughts in the UK and Europe and further El Niño-related turbulence in the coming months."}],[{"start":178.28,"text":"However, Bailey urged MPs not to jump to any conclusions when it came to the direction of UK interest rates. “What I want to dispel is the idea that we really have a secret plan, we know where we are going to go to,” he added."}],[{"start":193.28,"text":"The BoE is widely expected to leave interest rates unchanged when it meets next week. Bailey is predicted to be one of the BoE Monetary Policy Committee members who vote for rates to be kept steady at 3.75 per cent."}],[{"start":207.6,"text":"But financial markets are pricing in the prospect of a quarter-point rate rise before the end of the year."}],[{"start":213.54,"text":"Sir Dave Ramsden, one of the BoE’s deputy governors, warned: “Whether it’s geopolitics, or energy, or food, we seem to be in a world where there are more shocks.”"}],[{"start":223.08,"text":"Healey has been seeking to ease investor angst about the inflation and borrowing outlook by repeating his commitment to the fiscal rules set by his predecessor Rachel Reeves and vowing to preserve a “buffer” against economic uncertainty."}],[{"start":236.32,"text":"In the Commons on Tuesday he pledged to build on Reeves’ work. “She did the hard yards in rebuilding Britain’s fiscal credibility, public services and levels of growth after 14 years of Conservative government failure. I now build on that work.”"}],[{"start":251.42,"text":"Healey did not rule out further tax rises on top of Reeves’ two revenue-raising Budgets in 2024 and 2025."}],[{"start":258.36,"text":"“No chancellor ahead of a Budget will comment on speculation or rule measures out,” he said."}],[{"start":264.54,"text":"The Resolution Foundation think-tank predicted this week that the headroom against Healey’s key fiscal rule — which requires the current budget excluding investment to be brought into surplus by the end of the parliament — may have shrunk from almost £24bn to as little as £5bn."}],[{"start":280.8,"text":"That would imply that tough spending cuts or big tax rises lie ahead in the Budget."}],[{"start":291.24,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1788928105_5791.mp3"}