Bank of England policymakers decided to keep UK interest rates unchanged at 5.5%.

The bank faced a tough decision, having to balance signs of a slowdown in consumer spending against indications of growing inflationary pressures. While rates have been held this month, many analysts expect the cost of borrowing to be lowered in February.

While a rate cut could have lifted both consumer and general business confidence, it could also have risked fuelling price pressures growing on the back of higher energy and food bills.

Energy firm Npower increased both its gas and electricity prices last week and warned that its rival energy providers were likely to follow suit. Oil prices also remain near record highs of above $100 a barrel.

The bank’s Monetary Policy Committee last cut rates in December, reducing them to 5.5% from 5.75%.