UK's central bank under pressure as inflation soars to 30-year high
January 20, 2022, 7:17 am

UK's central bank under pressure as inflation soars to 30-year high

UK-London-Bank/Pixabay

The Xinhua reported that pressure is mounting on the Bank of England (BoE), the United Kindom's (UK) central bank, to raise interest rates as official statistics released on Wednesday showed that the country's Consumer Prices Index (CPI) rose by 5.4 percent in the 12 months to December 2021, beating expectations and reaching its highest level since early 1992.

The country's Office for National Statistics (ONS) said in a report that inflation rose in December mainly due to price hikes for food and non-alcoholic beverages, restaurants and hotels, furniture and household goods, and clothing and footwear.

Grant Fitzner, chief economist at the ONS, said: "Food prices again grew strongly, while increases in furniture and clothing also pushed up annual inflation, adding that "These large rises were slightly offset by petrol prices, which despite being at record levels were stable this month but rose this time last year."

The UK tightened restrictions in December to stem the spread of the highly contagious Omicron coronavirus variant. Fitzner said that nevertheless, "the closures in the economy last year have impacted some items but, overall, this effect on the headline rate of inflation is negligible."

The UK's soaring inflation has been piling pressure on the BoE. Samuel Tombs, an economist at Pantheon Macroeconomics, an economic research consultancy, said the December data left the central bank "little choice but to hike rates again in February."

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Echoing Tombs, Kitty Ussher, chief economist at the Institute of Directors, a British professional organization, said: "What is of particular concern is that the change from November has come mainly from an increase in the price of food. Not only does this provide additional evidence that inflation is becoming endemic rather than transitory, it also bodes ill for households facing multiple rises in the cost of living this spring."

Ussher added: "We therefore expect interest rates to rise again when the Bank of England Monetary Policy Committee next meets in early February."

In December 2021, the BoE raised the interest rate for the first time in more than three years after cutting it to a record low during the COVID-19 pandemic. The decision came as the annual CPI inflation in the country rose from 3.1 percent in September to a decade high of 5.1 percent in November.

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Since then, consumer prices stayed at high levels, partly as a result of surging energy prices, supply chain disruptions and labor shortages.

During the fourth quarter of 2021, British households saw their financial wellbeing deteriorate at the fastest rate since the second quarter of 2020, as surging living costs hit people's pockets and led to the steepest fall in cash availability since the start of 2014, the Scottish Widows Household Finance Index showed earlier this month.

A Financial Times article on Wednesday said that the BoE was put in a dilemma.

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The newspaper noted: "It is under pressure to raise interest rates to cool spending and bring inflation down towards its two percent target, but it does not want to squeeze household budgets too far and undermine the recovery."

Alpesh Paleja, lead economist at the Confederation of British Industry, a British business organization, said that upward pressure on CPI inflation is not expected to dissipate anytime soon. "We've not seen the end of rising inflation yet. We expect it to peak in the months ahead, not least if, as expected, the energy price cap is raised."

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Paleja added: "With prices on the rise and real wages already falling, it's likely households will face a cost-of-living crunch for much of this year."

Source: xinhua

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BENEFIT, the Kingdom’s innovator and leading company in Fintech and electronic financial transactions service, held its Annual General Meeting (AGM) at the company’s headquarters in the Seef District.
During the meeting, shareholders approved all items listed on the agenda, including the ratification of the minutes of the previous AGM held on 26 March 2024. The session reviewed and approved the Board’s Annual Report on the company’s activities and financial performance for the fiscal year ended 31 December 2024, and the shareholders expressed their satisfaction with the company’s operational and financial results during the reporting period.
The meeting also reviewed the Independent External Auditor’s Report on the company’s consolidated financial statements for the year ended 31 December 2024. Subsequently, the shareholders approved the audited financial statements for the fiscal year. Based on the Board’s recommendation, the shareholders approved the distribution of a cash dividend equivalent to 10% of the paid-up share capital.
Furthermore, the shareholders endorsed the allocation of a total amount of BD 172,500 as remuneration to the members of the Board for the year ended 31 December 2024, subject to prior clearance by related authorities.
The extension of the current composition of the Board was approved, which includes ten members and one CBB observer, for a further six-month term, expiring in September 2025, pending no objection from the CBB.
The meeting reviewed and approved the Corporate Governance Report for 2024, which affirmed the company’s full compliance with the corporate governance directives issued by the CBB and other applicable regulatory frameworks. The AGM absolved the Board Members of liability for any of their actions during the year ending on 31st December 2024, in accordance with the Commercial Companies Law.
In alignment with regulatory requirements, the session approved the reappointment of Ernst & Young (EY) as the company’s External Auditors for the fiscal year 2025, covering both the parent company and its subsidiaries—Sinnad and Bahrain FinTech Bay. The Board was authorised to determine the external auditors’ professional fees, subject to approval from the CBB, and the meeting concluded with a discussion of any additional issues as per Article (207) of the Commercial Companies Law.
Speaking on the company’s performance, Mr. Mohamed Al Bastaki, Chairman BENEFIT , stated: “In terms of the financial results for 2024, I am pleased to say that the year gone by has also been proved to be a success in delivering tangible results. Growth rate for 2024 was 19 per cent. Revenue for the year was BD 17 M (US$ 45.3 Million) and net profit was 2 Million ($ 5.3 Million).

Mr. Al Bastaki also announced that the Board had formally adopted a new three-year strategic roadmap to commence in 2025. The strategy encompasses a phased international expansion, optimisation of internal operations, enhanced revenue diversification, long-term sustainability initiatives, and the advancement of innovation and digital transformation initiatives across all service lines.
“I extend my sincere appreciation to the CBB for its continued support of BENEFIT and its pivotal role in fostering a stable and progressive regulatory environment for the Kingdom’s banking and financial sector—an environment that has significantly reinforced Bahrain’s standing as a leading financial hub in the region,” said Mr. Al Bastaki. “I would also like to thank our partner banks and valued customers for their trust, and our shareholders for their ongoing encouragement. The achievements of 2024 set a strong precedent, and I am confident they will serve as a foundation for yet another successful and impactful year ahead.”
Chief Executive of BENEFIT; Mr. Abdulwahed AlJanahi commented, “The year 2024 represented another pivotal chapter in BENEFIT ’s evolution. We achieved substantial progress in advancing our digital strategy across multiple sectors, while reinforcing our long-term commitment to the development of Bahrain’s financial services and payments landscape. Throughout the year, we remained firmly aligned with our objective of delivering measurable value to our shareholders, strategic partners, and customers. At the same time, we continued to play an active role in enabling Bahrain’s digital economy by introducing innovative solutions and service enhancements that directly address market needs and future opportunities.”
Mr. AlJanahi affirmed that BENEFIT has successfully developed a robust and well-integrated payment network that connects individuals and businesses across Bahrain, accelerating the adoption of emerging technologies in the banking and financial services sector and reinforcing Bahrain’s position as a growing fintech hub, and added, “Our achievements of the past year reflect a long-term vision to establish a resilient electronic payment infrastructure that supports the Kingdom’s digital economy. Key developments in 2024 included the implementation of central authentication for open banking via BENEFIT Pay”
Mr. AlJanahi concluded by thanking the Board for its strategic direction, the company’s staff for their continued dedication, and the Central Bank of Bahrain, member banks, and shareholders for their valuable partnership and confidence in the company’s long-term vision.