Bank of England 'sorry' for rising cost of living

The Bank of England governor has said he is "very sorry" that UK inflation is rising amid forecasts the cost of living could reach as much as 5%.

Andrew Bailey told the BBC that households were already feeling the impact of rising prices.

"I'm very sorry that's happening," he said. "None of us want to see that happen."

On Thursday, the Bank surprised financial markets by voting to keep the interest rate unchanged.

It signalled that the rate - currently at a historic low of 0.1% - will rise in the "coming months" as inflation is expected to grow.

However, the majority of the Bank's Monetary Policy Committee (MPC) voted to hold borrowing costs during November's meeting, in part to see how the jobs market had coped with the end of the furlough scheme.

Inflation is currently ahead of the Bank of England's 2% target at 3.1%. There are expectations it could rise to 5% by next April.

Mr Bailey said: "Inflation is clearly something that bites on people's household income. I'm sure they're already feeling that in terms of prices that are going up."

But he said the Bank wanted to see what impact both domestic and global issues were having on the cost of living before deciding on whether to raise rates.

Mr Bailey said current conditions were different because inflation was being caused by global "supply shocks" rather than demand pressure in the UK economy.

The Bank did not rule out a rate rise at its next meeting in December. The MPC meets every six weeks.

But commenting on the decision not to raise borrowing costs this month. Mr Bailey said: "Putting interest rates up, I'm afraid, isn't going to get us more gas."