Currently, with inflation expected to reach 8% by the end of June, there seems like little respite for household finances. Global oil and gas prices have already surged following the invasion in Ukraine, pushing UK petrol prices to record highs.
There are also concerns that food production costs could rise, with Russia being a large exporter of fertiliser. Russia and Ukraine and major exporters of not just oil and gas, but food also. The wider impact of the war in Ukraine creates significant economic uncertainty and makes the BoE decisions on rates trickier.
Russia and Ukraine together supply almost one-third of the world's wheat, a quarter of its barley, and nearly three-quarters of its sunflower oil, according to the ‘International Food Policy Research Institute’.
The idea of raising interest rates is to keep those current and predicted price rises, measured by the rate of inflation under control. In the face of global upheaval, this may be a relatively blunt tool. All eyes will be on the BoE’s long-term strategy. For now, the policymakers have increased interest rates to 0.75% from 0.50% - the third interest rate rise in four months.
Higher interest rates make borrowing more expensive. For households, that could mean higher mortgage costs, although - for most homeowners, the impact is not immediate, and some will escape it entirely.
An improvement on savings rates is likely to be far outweighed by the falling value of money stashed away. The spending power of savings is receding due to inflationary pressures.
Analysts have warned that there is no guarantee of the higher BoE Rate being reflected in better returns on savings.