Interest rates have increased in the UK for the third time in four months as the Bank of England tries to calm the rise in the cost of living, BBC reported.
The rise from 0.5 percent to 0.75 percent means rates are now at their highest level since March 2020, when Covid lockdowns began.
Energy bills and food costs are increasing and there is concern the war in Ukraine will push prices up further, BBC reported.
The Bank of England has warned inflation, the rate at which prices rise, may reach 8% and possibly higher, in the coming months.
Explaining why it had lifted its forecast, it said that the invasion of Ukraine by Russia “has led to further large increases in energy and other commodity prices including food prices”.
“It is also likely to exacerbate global supply chain disruptions, and has increased the uncertainty around the economic outlook significantly,” it added.
Prices had already increased by 5.5 per cent in the year to January, the fastest rate for 30 years and well above the Bank’s 2 per cent inflation target. The Office for National Statistics (ONS) said that energy and fuel prices had contributed to the rising cost of living.
The Bank’s policymakers cited the rising cost of living and strong employment as the reasons for the latest rate rise.
It also warned that inflation could hit double-digits later in the year if energy prices push up the energy price cap, BBC reported.