The Bank of England has raised UK interest rates to 5.25% from 5% in an effort to curb inflation. Analysts had been anticipating a rate rise of 0.25% in the near future, although they expected policymakers to wait until February.

Consumer price inflation has recently risen to 2.7%, the highest level in more than a decade. The rise is the third in four months, as part of an effort by policymakers to stem inflationary pressures.

The news will come as an unwelcome surprise to landlords and will add £21 to the monthly payments of those with a £100,000 interest only mortgage.

In a statement announcing its decision, the Bank of England said it expected consumer inflation to rise further in the near future.

Inflation is already well above the governments 2% target and some analysts believe it will exceed 3% when the latest figures are published this month.