Bank of England Governor Andrew Bailey warned on Monday that soaring energy prices would hit UK economic growth and consumer demand, triggering a “historic shock” to Britons’ incomes this year.

The Russian invasion of Ukraine will exacerbate the cost of living crunch in the UK, Bailey said, adding that the energy price shock in 2022 will be bigger than any year in the 1970s.

The governor of the Bank of England has sounded the alarm on so-called stagflation, suggesting that slowing economic growth and soaring inflation are the biggest challenges facing the central bank’s monetary policy committee since it was established in 1997.

Soaring energy prices were a key factor in Britain’s February consumer price inflation hitting a 30-year high of 6.2%, more than triple the Bank of England’s 2% target.

The Bank of England expects Russia’s war in Ukraine to help push inflation to around 8% in the second quarter of this year. It said inflation could climb further this month in the fall, when regulated energy prices rise further.

This year’s energy price shock will be bigger than any year in the 1970s.

Bailey said Britons were facing a “huge shock to total real income and spending” with higher prices for energy and imported goods.

“This is really a historic shock to real incomes,” he said at an event organised by Brussels think tank Bruegel.

The energy supply shock was exacerbated by Russia’s invasion of Ukraine, Bailey said, adding: “This year’s energy price shock will be bigger than any year in the 1970s. It’s important to note that the 1970s were years in a row, and we very much hope that’s not the case now. … But as a year, it’s a very, very big shock.”

Inflation in Britain spiraled in the 1970s after Arab members of the oil producer cartel OPEC imposed a crude oil embargo on countries that supported Israel in the Yom Kippur War.

Britain and the euro zone are facing a similar energy shock because they both rely on the same gas market, Bailey said, adding that the U.S. is different because of its larger domestic supply.

He also said the rebound in demand was stronger in the U.S. than in the U.K. and Europe, at the height of the coronavirus pandemic.

Last week, the Office for Budget Responsibility, the UK’s financial watchdog, forecast that real household incomes in the UK will contract this year at the fastest pace since records began in the 1950s.

“We expect it to lead to slower growth and demand. We’re starting to see evidence of that in consumer and business surveys,” Bailey said.

The OBR has cut its UK growth forecast for 2022 to 3.8% from 6%.

Slowing economic growth and rising inflation are often referred to as stagflation: a relatively rare situation, as prices for goods and services tend to rise most sharply during periods of strong consumer demand and strong output expansion.

Bailey said the BoE had a variety of monetary policy tools to deal with the current situation, but warned of challenges given that growth and inflation were “pulling in different directions”.

“It’s a big trade-off,” he added. “I think this is the biggest trade-off the MPC has faced in its nearly 25-year life.”

Meanwhile, Chancellor of the Exchequer Rishi Sunak told the House of Commons Finance Select Committee he was determined to rein in public borrowing and spending, saying he was concerned that looser fiscal policy could further fuel inflation.

Sunak said a 1 percentage point rise in inflation and interest rates could “erase” the space he had built in tax and spending plans ahead of the next election.