Energy Prices Spark Interest Rate Fears as UK Inflation Hits Five-Month High

Bank of England deputy governor Clare Lombardelli has warned that an interest rate rise is increasingly likely if high energy prices persist. Speaking in Warsaw, she stated that prolonged energy price pressures risk driving up inflation expectations and overall consumer prices.

UK inflation reached a five-month high of 3.1 per cent last month, with households facing a four percent increase in the energy price cap next week.

The central bank forecasts inflation will rise to around 3.7 per cent in the fourth quarter of this year and 4.2 per cent in early 2027.