Bank of England (BOE) chief Andrew Bailey has highlighted the issue of overcharging by retailers, specifically focusing on petrol prices, which he believes have been exorbitantly elevated.

Speaking on the BBC’s Newsround programme, Bailey stressed the importance of addressing overcharging to rein in inflation and alleviate the financial strain faced by families.

While regulators, including the CMA, have taken action to curb high inflation, Bailey emphasised the importance of tackling possible overcharging to ensure fairness.

Pressure mounts on petrol retailers

Bailey’s remarks have intensified pressure on petrol retailers, echoing Energy Secretary Grant Shapps’ recent criticism that fuel sellers are taking advantage of reduced competition caused by the Covid-19 crisis.

The CMA’s findings support this claim, revealing that fuel prices have increased due to decreased competition. Consequently, watchdogs, in collaboration with the government, have implemented measures to safeguard consumers from unfair practices.

The government’s concerns extend beyond petrol prices, as it fears companies may exploit high inflation, using it as a pretext to raise prices further and augment profit margins.

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Consequently, regulators have been instructed to crack down on unfair price hikes across the nation.

Retailers defend themselves

However, retailers have defended themselves against accusations of profiteering. Sainsbury’s chairperson Martin Scicluna reiterated the supermarket chain’s commitment to fair pricing, stating that they make a profit of only 3p (38¢) on every pound sold.

Similarly, Currys CEO Alex Baldock emphasised that the electrical retailer has restrained price increases despite improving profit margins.

Tesco chief executive Ken Murphy attributed the need for competitive pricing to intense competition among UK supermarkets.

Bailey acknowledged the challenges faced by individuals amid rising inflation and defended the BOE’s decision to increase interest rates to 5%, the highest since 2008.

He recognised the difficulty in making ends meet and the impact of this measure on borrowers.

Nevertheless, Bailey stressed the necessity of curbing price inflation and warned that failing to address it could lead to further interest rate hikes.

While inflation has started to ease, Bailey expects rates to only gradually approach the BOE’s 2% target by the end of next year.

He expressed empathy for individuals facing difficult choices due to high prices, emphasising the importance of taking steps to address the issue and alleviate financial burdens.