Page 1  The cost of living - speech by Andrew Bailey Given at Brunswick Group’s Cost of Living Conference, Coin Street, London  Page 2  Published on 01 March 2023  Andrew Bailey shares what we learnt from talking to people at our outreach events across the UK during the past year. Speech The latest release of data for the UK consumer price index showed an annual increase of 10.1% in January. It is down from a peak of 11.1% in October, not least because direct effects from energy prices have eased. But also, core inflation, which excludes the most volatile components of the consumer price index, fell more than expected to 5.8% in January. The Bank’s Monetary Policy Committee spends a lot of time poring over these data. Consumer price inflation remains much too high, and it is our job to bring it back down to our 2% target. That is why we have increased Bank Rate by nearly 4 percentage points over the past 15 months. To set the appropriate level of Bank Rate over the months ahead, we have to monitor our progress towards our target very carefully. But the data can only tell us so much. At times like these, more than ever, it is important to hear the human stories behind the data. These stories help us understand both what is actually going on and the impact it has on people’s lives.
If new mortgage rates rise by 3 percentage points, as market rates currently suggest, the ‘typical’ monthly interest payment will go up by just under £  Page 11  Bank of England outreach programmes Listening to people from all parts of the United Kingdom  It is no surprise that people who talk to us at our outreach events are worried about rising interest rates too. This is not just those on variable rates or those nearing the end of their fixed-term mortgage deals. Even if home ownership feels remote for many younger people, they worry that rents could rise as landlords look to pass through higher mortgage rates. Some older people have been able to save enough through the pandemic to pay off their mortgages early, but many struggle themselves or worry how younger people will cope. These concerns bring home that, by increasing Bank Rate by close to 4 percentage points, we have tightened monetary policy significantly. It is having an impact. Let me say two things about that. First, with the external shocks that have hit the economy, there is no easy way out. People on lower incomes are struggling to make ends meet. We must ensure that the situation does not get worse through homemade inflation taking hold. The UK labour market remains very tight. Since the start of the Covid pandemic, we have seen a large increase in the number of people who do not take part in the labour market in this country. The UK labour force has shrunk.