Prices set to rise despite Bank of England maintaining interest rates
Rates were set at 0.1% at the beginning of the pandemic
Last updated 4th Nov 2021
The Bank of England has announced that interest rates, which had been reduced during the COVID-19 pandemic, will remain at their current level.
Interest rates - which affect the amount of money being borrowed or saved - were brought down to 0.1% in March 2020, as the country felt the first effects of coronavirus.
However, despite low interest rates, inflation is on the rise and as a result, prices for goods such as food and energy are set to increase.
As the country has emerged from the pandemic, there was the potential for interest rates to increase, putting pressure on households.
But the Bank of England's decision to keep rates at their current level leaves homeowners better off, with less interest to pay back on mortgages and loans.
Prices to rise as the UK recovers
Inflation - which determines the cost of living for goods and services - has risen above the Bank of England's desired target of 2% by September. This is in part due to the rise in demand for energy and food.
Projecting total economic growth in the coming months, the Bank of England predicted that inflation will peak at 5% by April 2022, before falling back.
As a result, households are being warned for a tight winter as costs and taxes to counter inflation rise.
The announcement also caused the pound to fall in value against other currencies such as the euro and the dollar, leaving holidaymakers with less money than they had hoped for.