The Bank of England's recent quarter point increase in base lending rates to 4.75% highlights the extent to which the increasing cost of gas and electricity is putting pressure on the UK economy.

Annualised inflation figures for June 2006 came in at 2.5%, easily breaching the Bank of England's 2% target. Along with a resurgent housing market and growth in consumer spending, the high cost of energy was put on the spot as one of the biggest contributing factors.