Bank of England Governor Andrew Bailey has acknowledged for the first time that the bank is dealing with a spiral of rising prices in the UK as he vows to raise interest rates as necessary to bring inflation back to the bank's 2 percent target.

Speaking at the annual conference of British Chambers of Commerce in London, the Governor of the Bank of England said: "The UK is suffering from the effects of the second round of inflation, highlighting the spread of rapid price increases from energy and food to public wages and prices."

"Some of the strength in core inflation reflects the spillover effects of higher energy prices, but it also reflects the effects of the second round of inflation as the external shocks we've seen interact with local economic conditions, and with core inflation falling, these effects are unlikely to disappear in the second round as quickly as they appeared," Bailey said.

The Bank of England has repeatedly reiterated over the past 18 months that it is trying to stem the risks of rising energy and food costs affecting wages and domestic prices, but has now admitted it has failed in that task.

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