THE Bank of England has held interest rates for the fifth successive time, despite cautioning that energy prices and an AI-driven memory chip shortage will drive inflation higher.

Forecasts by the central bank have also suggested that food inflation is set to tick higher later this year, as supply issues linked to hot and dry weather weigh on prices for shoppers.

A majority of the central bank’s nine-strong Monetary Policy Committee (MPC) voted in favour of keeping interest rates at 3.75 per cent.

Six members of the MPC voted in the favour of keeping the rate steady, while three called for an increase to 4 per cent.

Bank of England governor Andrew Bailey said: “Inflation has fallen faster than we’d expected, but the conflict in the Middle East continues to mean high and volatile energy prices.

“That will cause inflation to rise again later this year.

“However the conflict unfolds, our job is to make sure any increase in inflation is temporary and that it comes back to our 2 per cent target.”