THE Agricultural Industries Confederation (AIC) has warned the Bank of England against "locking in" inflation ahead of its rate-setting meeting.

AIC, the UK's trade association for agri-supply businesses, has written to the Governor of the Bank of England, Andrew Bailey, to voice the concerns of businesses in the agricultural supply industry that the Bank is "starting to ‘lock in’ inflation to the economy, in contradiction with its objective that inflation be controlled to 2%".

It comes as the UK agricultural sector grapples with supply-led inflation. This is adding pressure to agricultural and food businesses' production costs, which ultimately hits consumers with higher food bills and contributes to the wider cost of living crisis.

In the letter AIC's chief executive, Robert Sheasby, told Mr Bailey: "The imposition of additional finance costs on business through base rate increases will lead to increased costs for farm businesses, processors, food manufacturers and eventually consumers.

"This will further lead to AIC Member businesses and farming customers to use debt to finance transactions on large scale purchasing accelerating this cost and diminishing the reductions seen in some spot prices.

"Our Members are also reporting that employees are starting to make approaches regarding in-year increases in salaries in order to assist with the cost of living, including impacts arising from rents and mortgage rate changes.

"Members have highlighted that as the next quarter develops, subject to any unforeseen impacts, reduced commodity prices should be expected, which in turn should benefit the consumer. This can only happen if subsequent costs to business have not been put up by additional finance to business and employees.

"AIC would therefore urge a cautionary approach to further rate rises at this time to avoid 'baking in' inflationary costs for business and the wider economy."