illustrates an important point. even as food price inflation is coming down, the level of food prices is still high. consumer food prices today are close to 30 per cent higher than at the start of the pandemic. the high cost of food continues be a major challenge for many people across the country, especially those on lower incomes. the prices consumers end up paying in local markets, shops and supermarkets are of course also affected by domestic costs added in the final stages of the supply chain – such as energy, transport and labour – as well as prices at the wholesale level. energy costs have been a major factor throughout the food supply chain, however. this is illustrated in chart 11. the chart shows an estimate of the indirect effect on consumer prices through the cost of doing business over the past four years. it is derived from information on the use of energy at various stages of the supply chain and effectively tracks how energy costs for businesses have contributed to the prices paid by consumers for final consumer goods and services. these indirect effects are significant, especially for food. the blue line shows that, over last winter, more than 1. 5 percentage points of food price inflation can be attributed to higher energy costs in the food supply chain. this is significantly more than in other sectors of the economy, as illustrated by the indirect effects on core goods ( in orange ) and services ( in purple ). ontr t on o nd re t energ e e ts to n lat on and bank al lat ons so what should we expect from here? bank of england the blue line in chart 12 shows annual food price inflation. while it is still high, it has fallen markedly since its peak in march. and we expect it to continue to fall over the coming months ( shaded area ) given easing cost pressures throughout the food supply chain. ann al and ann al sed monthl and bank al ood and non al ohol everages n lat on lat ons but even as we expect food inflation to fall, there are clearly risks as we look ahead to the months and years ahead. food inflation can be volatile in the best of days. and climate change is affecting whether patterns, increasing the risk of poor harvests. new, hardier crops may become an important source of nutrients globally, but the development of such variants may be years away. and global economic fragmentation can increase the risk of spikes in prices when supply fails and countries prioritise local markets. 15 the

the crisis, while the role of the state faces much less scrutiny. the question of whether monetary authorities, prior to the crisis, properly regulated interest rates as a key price in the economy attracts much less attention in the debate than it should. the same is true for the question of whether the existing store of individual countries'supervision tools was used correctly and adequately before the crisis. this is interesting, as the crisis poses some new challenges and questions. should monetary policy try to stabilize a broader set of indicators in the future, not just prices of consumer goods, but also real - estate or other asset prices? does it make sense to have a separate currency but not to have an autonomous monetary policy, like the baltic countries and bulgaria, or to have a separate currency but not to have an effective lender of last resort, like iceland? doesn't the system of exchange - rate pegs, quasi - pegs or currency boards increase imbalances of those who are pegged, and thus their vulnerability in a crisis? these questions are important, but they are not being properly discussed in the current debate. many forget that the state's role in the financial sector is already huge. central banks, finance ministries and various state agencies across the globe do regulate and supervise the financial industry more, not less, than many other industries. yet that is precisely why every further tightening of the screws should be carefully considered and analyzed, not adopted under pressure or threat, hastily or imprudently. one should bear in mind that regulation never distinguishes the bad banks from the good ones. and even this crisis has revealed that many financial institutions are in good shape and coping with its consequences quite well. although many people won't admit it, new rules being drawn up today will radically affect the financial market tomorrow and beyond. that's the way it goes : times of crisis permit dramatic and rapid changes that would not be implementable, or even thinkable, under normal circumstances. but when the dust settles, it is very difficult to reverse them. all thinking people in the financial sector should want to ensure that the rash solutions adopted in the present bad times, many of which will do little or no good anyway, do not in the long run generate much worse times for the industry, and hence its clients. putting out a fire is one thing. but improving the fire regulations is quite another. certainly a large fire can provide inspiration for future fire prevention. but it is by no means wise to fight the