AIC warns Bank of England on “baking in” inflation for agri-businesses ahead of rate-setting decision
The Agricultural Industries Confederation (AIC), the UK's leading trade association for agri-supply businesses, has warned the Bank of England against "locking in" inflation ahead of its rate-setting meeting today (22 June).
AIC has written to the Governor of the Bank of England, Andrew Bailey, to voice the concerns of businesses in the agricultural supply industry that the Bank is "starting to ‘lock in’ inflation to the economy, in contradiction withits objective that inflation be controlled to 2%".
It comes as the UK agricultural sector grapples with supply-led inflation. This is adding pressure to agricultural and food businesses' production costs, which ultimately hits consumers with higher food bills and contributes to the wider cost of living crisis.
The Bank of England's Monetary Policy Committee meets today (22 June) to review the UK's base interest rate as it tries to curb rampant inflation, which currently sits at 8.7% - well above the Bank's 2% target.
In the letter AIC's Chief Executive, Robert Sheasby, told Mr Bailey: "The imposition of additional finance costs on business through base rate increases will lead to increased costs for farm businesses, processors, food manufacturers and eventually consumers.
"This will further lead to AIC Member businesses and farming customers to use debt to finance transactions on large scale purchasing accelerating this cost and diminishing the reductions seen in some spot prices.
"[Our] Members are also reporting that employees are starting to make approaches regarding in-year increases in salaries in order to assist with the cost of living, including impacts arising from rents and mortgage rate changes.
"Members have highlighted that as the next quarter develops, subject to any unforeseen impacts, reduced commodity prices should be expected, which in turn should benefit the consumer. This can only happen if subsequent costs to business have not been put up by additional finance to business and employees.
"AIC would therefore urge a cautionary approach to further rate rises at this time to avoid 'baking in' inflationary costs for business and the wider economy."
Notes for editors
The Agricultural Industries Confederation (AIC) is the UK’s leading trade association, representing agricultural supply chain sectors including arable marketing, crop protection, agronomy, feed, fertiliser, and seed.
Formed in 2003, AIC has over 230 Members in the agri-supply trade which are responsible for £9 billion of annual farm trade.
AIC is marking 20 years as the leading voice of the UK agri-supply industry, working in support of modern, sustainable, commercial agriculture. Visit the website to find out more.
Political lobbying and policy influencing is a major part of its work, as well as supporting Members with technical information.
AIC Services, which is the professional services arm of the AIC, manages a range of services, including Assurance Schemes recognised by UK government as essential tools to underpin feed and food safety alongside fertiliser security. These include:
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Feed Materials Assurance Scheme (FEMAS)
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Feed Adviser Register (FAR)
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Forage Assurance Scheme (FAA)
Visit the AIC website to find out more.
Press contact
Oli Hill, Communications Manager, AIC
+44 (0)1733 385230
Authors
Robert Sheasby
Ed Barker
Oli Hill
As Head of Communications, Oli creates and oversees the content published on AIC's website, emails, Member briefings, print publications, and social media. A qualified multimedia journalist, he previously spent six years working at Farmers Weekly magazine as a Senior Reporter on the arable team, and latterly as Community Editor. More recently he was Communications Manager at Red Tractor.