Sir Dave Ramsden, the Bank of England’s Deputy Governor, is sounding the alarm on global inflation. The message is straightforward: the risks are skewing upward, and the forces driving them are largely outside the UK’s control.
That’s a meaningful shift from the Bank’s prior stance, which painted a more balanced picture. Now, the Monetary Policy Committee sees a world where multiple external pressures are converging at once.
What’s driving the concern
The Bank of England’s July 2026 Monetary Policy Report laid out the case in detail. Three major global forces are conspiring to keep inflation elevated.
First, energy prices. Ongoing conflicts in the Middle East continue to put upward pressure on oil and gas markets.
Second, supply chains are still feeling the squeeze. The culprit is surging demand for AI-related components, particularly microchips. The global race to build out AI infrastructure has created persistent constraints in semiconductor supply, and those bottlenecks are feeding into broader manufacturing costs.
Third, an unusually strong El Niño weather pattern is anticipated for 2026-27, which could significantly disrupt agricultural output globally. That means higher food prices. Food inflation is particularly sticky because it affects household budgets immediately and tends to shape public inflation expectations more than almost any other category.
According to the Bank’s projections, world export price inflation is expected to rise markedly during the second quarter of 2026 and remain elevated through the back half of the year. That feeds directly into UK import prices.
The UK’s position
As of September 2026, UK Consumer Price Index inflation stood at 2.6%. That’s above the Bank’s 2% target.
Ramsden acknowledged that there has been meaningful progress on domestic disinflation. Wage growth has moderated, and some of the post-pandemic price pressures that plagued UK consumers for years have faded.
The MPC’s assessment is that second-round effects—the kind where higher import costs trigger broader wage demands and price increases across the economy—should remain moderate for now. Where the Bank previously saw roughly equal chances of inflation coming in above or below forecast, the scales now tip toward the upside.