Bank of England rate-setter says inflation not a ‘particularly British problem’

A Bank of England policymaker has dismissed suggestions that inflation is a problem unique to Britain, as she called for more interest rate cuts.

Swati Dhingra, a member of the Bank’s Monetary Policy Committee (MPC), argued there was no need to be “overly cautious” about lowering borrowing costs.

Writing in The Times, Ms Dhingra said: “It’s become commonplace to assert that inflation in the UK is out of step with other economies, requiring a more careful approach to cutting interest rates as a result.

“With prices for services and food rising more quickly than in the major eurozone countries, inflation looks like a particularly British problem.”

But she said that was not the case and that the factors putting pressure on UK inflation “will fade”.

A report from the Organisation of Economic Co-operation and Development (OECD) earlier this week found that Britain will experience the highest level of inflation among the G7 group of advanced economies this year.

In 2026, the overall inflation rate will be the second highest in the G7, behind only the US, according to its forecasts.

Ms Dhingra said food prices are often a named “culprit for accelerating inflation”, having risen at a faster pace in the UK than in the eurozone.

“But it’s not clear that this gap reflects anything other than global trends and slightly different supply chains and shopping baskets in the two economies,” she wrote.

“The difference in inflation between the UK and our continental neighbours can be largely explained by administered prices and global commodity shocks.

“These should pass.

“We can afford to cut rates further and not put additional strain on economic growth without threatening the inflation target.”

Her comments contrast to remarks made by fellow MPC member Megan Greene earlier this week, who said risks to the UK’s inflation outlook may have increased.

Ms Greene said a “cautious approach to rate cuts going forward” was appropriate in the face of “uncertainty and risks” to the economy.