Interest rates rise further to combat surging energy prices

interest rates

Interest rates rise further to combat surging energy prices

The Bank of England has reportedly raised interest rates further to combat the rapid rise in energy prices and the cost of living.

The increase from 0.25 percent has doubled to 0.5 percent.

The news comes after inflation rates throughout the UK were announced to be at their highest in 30 years.

The consumer prices index (CPI) is expected to reach up to 7.25 percent in April, averaging out a six percent, which has prompted the Bank to increase their interest rates further.

Thousands of households throughout the UK are predicted to struggle with the steep rise in energy bills, fuel costs, shop prices, rent and household appliance prices.

Shortages in staff and in goods also resulted in less sales being held in January.

However, many employees faced pay rises to encourage more people into the empty job roles.

The five percent increase is reportedly not enough to keep up with inflation, though, especially as energy bills have risen by a massive 54 percent this year.

Alongside the Bank’s decision to raise interest rates, Rishi Sunak has also announced that some eligible households will receive money to help them with their bills this year.

According to the Bank’s latest Monetary Policy Report, post-tax incomes are expected to fall by 2 percent.

This is reportedly the biggest decrease since records began in 1990.

Many people also cut down their hours at work, stayed in education or retired early during the Covid-19 pandemic, which has caused further problems.

Nevertheless, with interest rates rising and more people in work, policymakers are expecting the economy to improve by around 1.25 percent next year.

(Image: Christopher Bill)

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Lauren joined the Gi Media team in August 2021.