Six-year high for interest rates

Today, interest rates have hit a six-year high of 5.5%.

The Bank of England said that while inflation, currently at 3.1%, would probably fall back toward the 2% target this year, capacity constraints and rising pricing power of companies meant risks to the inflation forecast were skewed to the upside.

"Higher interest rates will squeeze family budgets tighter. There are no short-term prospects of costs going down and it's now the time for people to have a good hard look at their finances and draw up a proper budget for the future," said Angela Knight, chief executive of the British Bankers' Association

Some analysts are are predicting a further rise next month.