The Bank of England announced this Thursday a rise in interest rates of a quarter of a percentage point to 4.25 percent, which represents the eleventh consecutive increase, aimed at controlling the rise in inflation, which is at 10,4 percent.
As analysts in the United Kingdom had anticipated, the monetary policy committee of the English issuing entity voted 7 to 2 in favor of applying this new increase.
The decision comes a day after the Office for National Statistics (ONS) reported that British year-on-year inflation stood at 10.4% in February, compared to 10.1% in January, above the bank’s objective of placing it at 2%.
When announcing its decision, the bank indicated that it expects the British economy to grow slightly in the second quarter -April to June-, after having indicated a few months ago that it could suffer a contraction of 0.4%.
“Although subdued overall, activity held up better than previously expected, particularly in the consumer services sector,” the bank said.
He added that the government’s decision to cancel a planned 500-pound (565-euro) increase in households’ annual energy bills in early April will help households.
“Real disposable household income could remain broadly stable in the near term, rather than fall significantly,” the bank said.
The rise in inflation responded to an increase in the prices of food and non-alcoholic beverages, especially vegetables due to bad weather in Europe, which caused a drop in food imports from European countries, according to the ONS.
The increase was also due to the rise in the prices of alcohol sold in “pubs” (bars) and restaurants.
Last week, Hunt told Parliament that the UK will avoid a technical recession – two consecutive quarters of economic contraction – this year.
Due to the increase in the cost of living, the United Kingdom has experienced a series of strikes in recent months that have supported different sectors -postal staff, trains, buses, health or civil servants- demanding a salary increase.
For its part, the unemployment rate in the United Kingdom remained at 3.7 percent between November 2022 and January 2023, the same as in the previous quarter.
