The Bank of England has kept UK interest rates on hold at 5 per cent.

The base rate freeze had been widely anticipated amid growing concerns about the pace of inflation.

Surging food and energy prices pushed Consumer Price Index inflation to 3 per cent in April, well above the government's 2 per cent target rate.

This has made the Bank of England's Monetary Policy Committee (MPC) reluctant to slash rates, despite growing evidence of slower economic growth as the credit crunch bites.

Ian McCafferty, chief economic adviser to the CBI business group, told BBC News: "The Bank had little option this month other than to leave interest rates on hold.

"Oil and commodity prices are still of great concern and businesses are having to raise prices as profit margins get squeezed further."

The British Retail Consortium supported the Bank's decision to keep rates steady at 5 per cent.

"Struggling customers and retailers certainly need a boost but, with rising oil and commodity prices stoking inflation to well above the 2 per cent target, leaving rates unchanged was the wise option," said its director general Stephen Robertson.

The MPC has slashed interest rates three times since December 2007 in an attempt to boost the slowing economy.

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