Mervyn King and his colleagues on the Bank of England’s Monetary Policy Committee will have plenty to consider at the monthly interest rate-setting meeting next Wednesday and Thursday.

Ofwat has tried to justify a 7 per cent increase in the typical water bill for this year, well ahead of January’s 2.7 per cent CPI inflation measure. Local authorities are set to increase council tax by an average of 4.2 per cent.

Past interest rate rises from the Bank appear to feeding down into higher mortgage bills but have done little to dampen house prices. Nationwide revealed a 0.7 per cent pick-up in February, making a 10.2 per cent year-on-year rise. Those with bargaining muscle will be itching for above-inflation pay rises.

At least one more increase in rates looks inevitable, though the market is betting it won’t come next week.

Explore Economics

• Pre-Budget Report 2009

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