The Bank of England has lifted UK interest rates to 0.75% as it tries to cool inflation, increasing the rate from 0.5%.

Personal finance expert James Andrews, from comparison site money.co.uk, said: “With a surge in the cost of essential bills, and incomes not rising to match, the Bank of England is treading a very fine line at the moment.

“Any move to raise interest rates simply puts more pressure on already squeezed households and businesses. But failure to act while prices soar could be seen as a dereliction of duty.

“Rate rises won’t affect energy prices or petrol costs – two of the factors driving up inflation at the moment – but after its last rate rise, the Bank said it was acting to try and stop temporary rises in energy prices being turned into more permanent inflationary pressures through wage rises.

“Sadly, if wages don’t rise, struggling Brits will be forced to cut back spending elsewhere to meet essential bills – or turn to debt to make ends meet. The worry is that people borrowing to meet bills now, will see even higher bills in future as more of their income goes on servicing that debt as well as meeting their day-to-day spending needs.

“That means, rather than stopping inflation, interest rate rises by the Bank could simply be accelerating the UK’s path into a recession.”