As had been widely predicted, the Bank of England's Monetary Policy Committee (MPC) has today decided to raise interest rates by 0.25 per cent to 5.5 per cent.
It is the first base rate rise since January, but equates to a one per cent increase since the 4.5 per cent level witnessed last July.
The MPC explained that as consumer price index (CPI) inflation had risen to 3.1 per cent, it was necessary for an increase in the base rate to try and bring CPI inflation back down towards the target of two per cent.
The interest rate rise, while anticipated by most economic experts, is still likely to prove a burden for many Britons who are struggling with debt.
"Higher interest rates will squeeze family budgets tighter," commented Angela Knight, chief executive of the British Bankers' Association.
"There are no short-term prospects of costs going down and it's now the time for people to have a good hard look at their finances and draw up a proper budget for the future."
Adrian Coles, from the Building Societies Association, reiterated this point of view, saying "consumers should not panic as a consequence of this rise, but should try to assess how it will affect their finances".
Find out more about interest rates
© Adfero Ltd