Bank Holds Interest Rates Amid Energy Price and Chip Shortage Fears

The Bank of England has decided to hold interest rates at 3.75% for the fifth consecutive time, despite warning that energy prices and a memory chip shortage will drive inflation higher.

Forecasts by the central bank suggest that food inflation is set to increase later this year due to supply issues linked to hot and dry weather, weighing on prices for shoppers.

The Bank of England's governor, Andrew Bailey, stated that 'inflation has fallen faster than we'd expected, but the conflict in the Middle East continues to mean high and volatile energy prices.'

According to the central bank, UK inflation is likely to peak at 3.2% later this year before steadily easing back towards the Bank's 2% inflation target.