The Bank of England has raised interest rates for the second time in three months in a bid to cool soaring prices.
The increase to 0.5% from 0.25% comes as households face soaring energy bills and rising costs to the weekly shop. Prices are currently climbing at the fastest rate in 30 years, and there are fears that the pace will accelerate.
Meanwhile, data from the Office for National Statistics shows that average pay rises are failing to keep up with the increased cost of living. By putting up interest rates, the Bank of England hopes to make borrowing and spending more expensive, dampening down consumer prices.
But some analysts question whether it will work as major factors driving inflation – such as soaring energy bills – are dictated by global forces.
Latest figures showed inflation hit 5.4% in the 12 months to December, and the Bank of England (BoE) has warned the rate could reach close to 6% by April, well above its target of 2%.
That has led to some analysts forecasting more interest rate rises in the months ahead, with some predicting the rate could reach 1.5% by the year-end or early 2023.
Source: bbc.com
