Howard Archer, chief UK and European economist at Global Insight, suggests that inflation pressures, which are assessed by the rate-setting monetary policy committee, will lead to the cost of borrowing being increased during 2007.
And with millions of British people facing debt management difficulties, personal finance pressures look likely to heighten still further as economic issues impact indebted consumers.
“Consumer price inflation moderated slightly more than expected in May which is obviously welcome news for the Bank of England, but the bank is by no means out of the inflation woods yet and another interest rate hike remains very much on the cards by August at the latest,” said Mr Archer.
Meanwhile, accountancy firm KPMG forecasts that more than 130,000 British consumers will enter an Individual Voluntary Arrangement (IVA) by way of a debt solution over the course of this year.
Commenting, Cleardebt CEO, David Mond said: “People whose fixed-rate mortgages come to an end in the next couple of months are going to face a substantial increase in their monthly repayments, which could will leave many consumers in a position where they can no longer service their unsecured debt.”