Bank of England chief claims inflation is about to fall 'markedly' in major speech

Bank of England Governor Andrew Bailey will tell bosses easing food and energy bills will help drive a marked slowdown in the rate of inflation over the rest of the year. Mr Bailey will stress "unacceptably high" prices are his "pre-occupation" in a speech to be delivered to finance industry chiefs and Chancellor Jeremy Hunt at London's Mansion House later on Monday evening.

Consumer Price Index (CPI) inflation in May struck a higher-than-expected 8.7 percent - above any other of the world's richest economies.

The Bank of England has a target to get inflation to two percent, but has previously forecast it could remain above five percent by the end of the year, despite a recent easing in energy prices.

Prime Minister Rishi Sunak has pledged to halve inflation by the end of this year.

Mr Bailey is expected to say in his Mansion House speech: "UK headline inflation is set to fall markedly over the remainder of the year.

"This largely owes to lower energy prices as last year's substantial increases drop out of the annual calculation. Food prices should fall too as lower commodity prices feed through to prices in the shops."

Mr Bailey will also say: "As you will understand, my pre-occupation at the moment is inflation.

"It is crucial that we see the job through, meet our mandate to return inflation to its two percent target, and provide the environment of price stability in which the UK economy can thrive.

"This is the best contribution monetary policy can make to the prosperity of the United Kingdom."

Mr Bailey will also stress Britain's economy has shown "unexpected resilience" in the face of economic shocks.

Inflation peaked at 11.1 percent late last year and has slowed in recent months, but the Bank of England has hiked interest rates consistently over the past year in an effort to get inflation down faster.

The Bank has been under fire for its handling of monetary policy with accusations it had been too slow to react with some warning bringing inflation back down to two percent will be hard.

Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, said: "The Bank of England’s task of getting inflation back to its two percent target looks like a much harder prospect given how hot prices are still running, which is why the markets are pricing in rates to hit as high as 6.25 percent.

"So, a speech from the Bank of England Governor Andrew Bailey later will be picked over, for any signs that this is justified or an overblown forecast.

"Two BofE policymakers have already highlighted other indicators further down the supply chain, like producer prices, are already showing a sharper fall in inflation, which should soon seep through more quickly to consumer prices.

"The question is whether their views gain ground around the table at the Bank of England."