The British Independent Retailers Association (BIRA) has commented on today's 'double blow' of the interest rate rise jut a day after inflation rates also soared.
The announcement from the Bank of England that interest rates will be raised by 0.25 per cent, taking the base rate to 4.25 per cent is the 11th rise since December 2021.
It was just yesterday that inflation rates hit 10.4 per cent, which has meant prices in drinks, clothing, meals out and fresh food have been driven high.
The interest rate rise will now mean monthly bills might affect mortgages, house prices and credit cards.
BIRA, which works with over 6,000 independent businesses of all sizes across the UK, has said this second blow is putting strain on the already struggling high street and independent business owners.
Andrew Goodacre, CEO of BIRA said that another interest rates increase will further dampen consumer demand, at a time when we need to see the economy grow. Increasing interest rates to reduce inflation works when the inflation is demand driven.
"This time around, higher prices have been driven by energy and supply chain pressures. Higher wages/salaries will not drive inflation as they are need to pay for higher energy and borrowing costs.
"It's disappointing to see that the Bank of England have made this decision at a time when retailers and consumers need certainty.
"Although inflation increased slightly last month, we have to accept that high inflation is currently due to high energy, high productions costs and supply chain pressures. Against these factors, higher interest rates are a blunt instrument and will simply suffocate economic growth.
"We also had the Office of Budget Responsibility (OBR) forecast of inflation at 2.9 per cent by the end of the year so I think the Bank of England could have held the rates when they are, safe in the knowledge that inflation will reduce when the current reduced cost of energy is passed on to the businesses and consumers.”
