The Bank of England has resisted pressure from retailers and business groups to cut interest rates and has kept them on hold at 5.5%.

The Bank's monetary policy committee is concerned over spiralling inflation, with utility, food and commodity prices all going up in recent months.

Many analysts now expect to see a rate cut in February in a bid to bolster the economy, which has been feeling the pinch following the global credit crunch and subsequent tightening of lending.

The Bank of England cut rates in December from 5.75%, the first downward movement in two years.