(Bloomberg) -- Bank of England Governor Andrew Bailey warned the central bank may have to raise interest rates again and that food and energy costs remain an upside risk to the inflation outlook.

Bailey said the central bank’s policy makers are “on watch for further signs of inflation persistence that may require interest rates to rise again,” according to a text of a speech he delivered to the National Farmers’ Union on Monday.

The comments were the most detailed rebuttal yet from the BOE against bets that officials will cut rates three times next year. A darkening economic outlook and the risk of recession have prompted traders to brush off the BOE’s assertion that rates are likely to stay elevated for a prolonged period — and that the next move may be up.

Bailey warned that food price inflation, which is still in double digits, could spike again. He said climate change, protectionism and the impact of the conflict in the Middle East on energy costs all threaten to send grocery bills surging in the months and years ahead.

He reiterated that it is too soon to be thinking about rate cuts, warning that services inflation remains “much too high” and that wage growth is still “elevated.” He said that a near 30% increase in food prices since the start of the pandemic may still be driving workers’ wage demands and causing more second-round effects along with energy costs.

“The MPC’s latest projections indicate that monetary policy will likely need to be restrictive for quite some time yet,” he said. “Let me be very clear: it is far too early to be thinking about rate cuts.”

Food inflation rocketed to its highest level in more than four decades earlier this year after a surge in costs facing farmers and disruption to grains supply from Ukraine. Food producers in the UK have been squeezed by a jump in costs for fuel, fertilizer and feed, fueling sharp rises in grocery bills.

Bailey warned households to expect further volatility in food bills.

“Even as we expect food inflation to fall, there are clearly risks as we look ahead to the months and years ahead,” he said. “Climate change is affecting weather patterns, increasing the risk of poor harvests.”

“Global economic fragmentation can increase the risk of spikes in prices when supply fails and countries priorities local markets. The tragic events in the Middle East have added upside risks to energy prices and through that to the cost of food production,” he added.

While food inflation cooled from the peak of almost 20% earlier this year, it is still in double digits.

BOE rate-setter Swati Dhingra also warned last week that consumers should brace for more spikes in the cost of food given the threats from climate change and simmering geopolitical tensions.

“Given that we’re going to be — and I can’t be certain about this — possibly seeing more such kinds of food price hikes, primarily coming from the geopolitics as well as climate change, I think we need to have a food preparedness program in place,” Dhingra said.

The easing in food price increases, along with lower energy bills, helped to bring inflation down to 4.6% in October, the lowest level in more than two years. 

--With assistance from Andrew Atkinson.

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