The increase will be unwelcome for retailers, who already fear that the two rises last year - the most recent in November - will dissuade shoppers from splashing out in 2007. As he unveiled third-quarter trading figures on Tuesday, Marks & Spencer boss Stuart Rose warned that there were signs of consumer belt-tightening.
Although a third rise was on the cards because of climbing consumer price inflation, it had been widely expected that it would not come until next month.
The British Retail Consortium condemned the Bank's decision, which it described as 'an unnecessary blow that will hit consumers hard'.
BRC director-general Kevin Hawkins said: 'The Bank has overreacted. Much of the rise in consumer prices that the Bank is trying to tackle has been driven by rising food costs caused by increases in world commodity prices resulting from poor harvests. This is a temporary problem that this interest rate rise will do nothing to resolve.'
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