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Homeowners and borrowers could be hit with a shock interest rate rise when the Bank of England meets this week, experts have warned.
Steep rises in energy bills - such as British Gas's record hike last week - have heaped pressure on the Bank's rate-setters despite recession risks mounting.
The Monetary Policy Committee (MPC) is currently battling against inflation running at 3.8% - almost double its 2% target - and due to surge further in coming months, possibly as high as 5% or more.
Most experts predict rates unchanged at 5% as the UK's economic slowdown gathers pace, but economists have highlighted the risk as one MPC member called for a hike at July's meeting - sending a clear signal on the Bank's determination to control inflation.
"Pressures for higher rates are likely to linger on the committee...Overall we cannot entirely rule out the risk that the committee will sanction higher rates this time," Investec economist Philip Shaw said.
Capital Economics economist Vicky Redwood added: "Inflationary pressures continue to prevent the MPC from cutting rates in response to the deteriorating real economy.
"In fact, if interest rates change this month, they are more likely to go up than down."
Minutes of the July meeting showed signs of the delicate balancing act for the MPC, with the decision to keep rates steady a "difficult one". The committee opted to hold steady because of the possible impact of a surprise move.
But a worsening picture of the UK's economic health has built up during the last month. This would add weight the calls for rate cuts if not for the inflation impact from rising energy bills, food and fuel costs.
Official figures estimated the economy expanding by just 0.2% between April and June - the slowest pace for three years and adding to fears of recession later this year, defined as two successive quarters of negative growth.
Steep rises in energy bills - such as British Gas's record hike last week - have heaped pressure on the Bank's rate-setters despite recession risks mounting.
The Monetary Policy Committee (MPC) is currently battling against inflation running at 3.8% - almost double its 2% target - and due to surge further in coming months, possibly as high as 5% or more.
Most experts predict rates unchanged at 5% as the UK's economic slowdown gathers pace, but economists have highlighted the risk as one MPC member called for a hike at July's meeting - sending a clear signal on the Bank's determination to control inflation.
"Pressures for higher rates are likely to linger on the committee...Overall we cannot entirely rule out the risk that the committee will sanction higher rates this time," Investec economist Philip Shaw said.
Capital Economics economist Vicky Redwood added: "Inflationary pressures continue to prevent the MPC from cutting rates in response to the deteriorating real economy.
"In fact, if interest rates change this month, they are more likely to go up than down."
Minutes of the July meeting showed signs of the delicate balancing act for the MPC, with the decision to keep rates steady a "difficult one". The committee opted to hold steady because of the possible impact of a surprise move.
But a worsening picture of the UK's economic health has built up during the last month. This would add weight the calls for rate cuts if not for the inflation impact from rising energy bills, food and fuel costs.
Official figures estimated the economy expanding by just 0.2% between April and June - the slowest pace for three years and adding to fears of recession later this year, defined as two successive quarters of negative growth.
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