And it’s not just that shipping costs for Red Sea routes are rising, with some estimates indicating an increase of 250%, and even 300%, as companies are forced to divert their routes and send their ships around the Cape of Good Hope instead.
The hit to energy costs is a growing concern within Whitehall.
It is estimated that the Red Sea contains “12% of seaborne oil.” US and British air strikes against Houthi facilities in Yemen on Thursday night sent the price of Brent crude reaching $80 per barrel, up nearly 4%. If tensions ease, it could be just a bump, but it could also signal an unwelcome change in the direction of energy prices.
Britain may be lucky.
Speaking to the Treasury Select Committee this week, Governor Andrew Bailey noted that expectations at the end of last year had not been met: so far, there has been “no prolonged rise in oil prices” despite increasing turmoil along the way. Suez Canal.
But these words may soon seem largely outdated, especially since it remains unclear whether the UK has learned its lessons from previous crises.
But are we ready for another inflationary spike? Certainly, after much trial and error – and at great costs to consumers – the Bank appears to be taking the risks of higher inflation more seriously.
It’s been a bumpy road since the old lady decided this was an issue she might need to address, but the bank will likely end 2023 ahead of schedule. His latest forecast, which has been proven wrong on countless occasions, assumed that the headline inflation rate he reached last November would not be reached before next April.
That the bank has maintained a relatively hard line in response – insisting that interest rates cannot budge down from 5.25% for some time – has become a point of contention between Threadneedle Street and Tory MPs who are concerned that the bank is now holding up their chance. To achieve economic growth.