The Bank's Monetary Policy Committee (MPC) is due to make its latest monthly rate decision on Thursday and while it kept rates on hold at 5.5% in June, it seems highly likely that the hawks on the committee will push rates up a further quarter percentage point.

Although UK inflation fell to 2.5% in May, it still remains above the government's 2% target and the Governor of the Bank of England - Mervyn King - said last month that people should expect higher interest rates by the end of this year unless consumers and companies slow spending

He said the Bank was concerned that spending was rising faster than the economy's ability to cope with the higher demand, and said that "more persistent inflationary pressures have picked up".

But business leaders have urged the Bank not to raise interest rates this week.

EEF – the Manufacturers Organisation - pointed to the fact that while inflation remains above the government's target, it is now falling, thanks to the four increases in interest rates since last August.

EEF chief economist Steve Radley said "We have supported the Bank all the way through the current cycle of increases,"  .

"However, we now believe that there are indications that the medicine applied so far is beginning to take effect and the case for another rise is not made."