UK interest rates rise to the highest since 2009

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The Bank of England is trying to stem the pace of rising prices by raising interest rates.

Since December, rates have risen four times.

Fuel, energy and food costs are expected to go up by 10% by the end of the year due to the war in Ukraine.

The UK economy is expected to shrink next year according to the Bank.

Following Russia's invasion of Ukraine, households reined in their spending, which was hitting growth.

The Bank has increased interest rates four times since December to try and contain the rising cost of living.

The Bank's Monetary Policy Committee predicted that inflation would hit 9% in the coming months, up from a previous forecast of 8%, and reach 10% by the end of the year.

The increase in the energy price cap in April and a further increase in October could push household bills up to 2,800 a year.

Consumers are facing higher prices for food, goods and services.

Following Russia's invasion of Ukraine, global inflationary pressures have increased sharply. The outlook for world and UK GDP growth has deteriorated due to this.

The sharp rises in global energy and tradeable goods prices on most UK households is expected to have a significant adverse impact on UK GDP growth over the first half of the forecast period.

The UK economy is expected to contract by 0.25 in 2022, down from the previous forecast of 1.25% growth. It would leave the UK at a real risk of a recession, even though it wouldn't technically be one.

The growth outlook for 2023 has been slashed by the MPC.

Russia is one of the world's top oil and gas producers and its invasion of Ukraine has driven up global energy prices. Russia and Ukraine are major producers of commodities, and the prices of which have gone up.

Inflation in the UK hit a 30-year high of 7% in the year to March due to the impact of the Pandemic and was well above the Bank's 2% target.

Inflation is expected to peak this year before falling back to 3.5% in 2023 and to 1.5% in 2024 according to the MPC. monetary policy is unable to prevent the impact of consumers tightening their belts.

The unemployment rate is expected to rise from a low this year to 5% by the year 2024.

Interest rates will rise as high as 2.5% in mid-2023 before falling back again, according to its forecasts.