Interest rates pushed up to new 15-year high

The Bank of England has opted to further hike interest rates to 5.25%, as the struggle to claw down inflation continues.

The widely anticipated decision is the 14th time in a row interest rates have been bumped up, with concerns expressed that the Bank is inflicting too much pain on mortgage holders and renters who are having costs passed onto them by landlords. The last time the base rate was this high was in April 2008.

The Bank of England’s monetary policy committee voted 6-3 for the 0.25% increase. Two members had supported a 0.5% rise with one voting to keep rates unchanged.

UK inflation was at 7.9% in June, the lowest it has been for more than a year, but still nearly four times higher than the Bank of England’s 2% target.

Food has been one of the biggest drivers of inflation. The pace of increase in food prices dropped to 17.3% from May’s 18.3%, but they also remain much higher than a year ago.

Prime Minister Rishi Sunak vowed in January – when inflation stood at 10.1% – to slash price growth by half by the end of the year.

The cost of living crisis is having a major impact on some consumer business too. This morning, exclusively revealed that high street retail chain Wilko is on the brink of collapse, after the £1.2bn-turnover business filed a notice of intention to appoint administrators.