Economist predicts further rate rise

Howard Archer, senior UK and European economist at Global Insight, said that this month’s increase had not had the full effect that the Bank of England hoped for.

Also to blame were rising debts, fuel prices, bills and university tuition fees which are also likely to push up inflation away from the target rate.

“An interest rate hike before the end of the year remains a very real possibility, particularly if economic growth remains relatively robust in the third quarter,” said Mr Archer.

The Bank of England raised the interest rate to 4.75 per cent this month in a bid to tackle inflation.

While this has pushed up the amount of monthly debt people repay on loans and mortgages linked to the rate, those hit by the rate rise should prepare themselves for another increase.

Mr Archer said that the Bank of England is “unlikely to relax” its efforts to tackle inflation, meaning that many may start saving now for future interest rate hikes.