The news was revealed as the Bank of England raised the interest base rate from 2.25% to 3%. The interest rate was raised in order to bring inflation back down from its current 10%. This is the eighth consecutive rise since December last year.
The Bank of England has also predicted that the economy will recover and inflation will fall in the middle of next year. But it said that the country is already in a recession and this is expected to be “prolonged”.
The Governor at the Bank of England Andrew Bailey said: “If we do not act forcefully now, it would be worse later on” and he forecast a “tough road ahead”.
“For a long time inflation has been low and stable. Most people did not have to worry about inflation but that has changed. It has changed with supply chain problems after the pandemic, the Russian invasion of Ukraine and the shrinkage of the UK labor force,” he said.
“The sharp increase in energy prices caused by Russia’s invasion of Ukraine has made us poorer than a nation.”
The impact of the supply chain has seen food prices continue to rise.
Most recently, the prices of vegetable oil, pasta, tea and chips have skyrocketed as the cost of living crisis takes hold.
Rocketing inflation has forced UK consumers to cut back on their grocery shopping, with almost a third saying they stopped buying products due to increased prices, according to new research.
Meanwhile, Emma McClarkin, chief executive of the British Beer and Pub Association said: “The last thing pubs and brewers want to do is put prices up for loyal customers but are stuck between a rock and hard place. The cost of running their businesses has become completely unsustainable, the price of key ingredients and utilities are rocketing, and now their customers will, understandably, be tightening their belts even further following the news of interest rates rising.
“If the Government wants to help our industry keep a trip to the pub affordable this Christmas, we need the beer duty freeze to be reinstated as soon as possible, and a wholesale look at the cost of doing business. Spiraling inflation is driving our pubs and brewers to breaking point and many more will be forced to shut their doors for good if urgent action isn’t taken to save them.”