Originally Published: 04 AUG 22 07:12 ET

Updated: 04 AUG 22 07:28 ET

By Anna Cooban, CNN Business

(CNN) -- Central bankers in the United Kingdom have announced the biggest increase in interest rates in 27 years, as spiraling inflation continues to cripple millions of households' finances.

The Bank of England raised the cost of borrowing by 50 basis points to 1.75% — the sixth time the central bank has raised rates since December, and follows recent hikes by the European Central Bank and Federal Reserve to tame runaway prices.

In June, annual consumer prices rises reached a four-decade high to hit 9.4%, plunging millions of Britons into a cost-of-living crisis that has forced many to choose between 'heating or eating'.

The central bank said in a Thursday press release that inflationary pressures had "intensified significantly" in recent weeks.

"That largely reflects a near doubling in wholesale gas prices since May, owing to Russia's restriction of gas supplies to Europe and the risk of further curbs," it said.

The Bank of England has also forecast inflation to rise above 13% in the autumn, when energy bills are due to increase, and to "remain at very elevated levels throughout much of 2023."

But the Resolution Foundation, a think tank, said on Wednesday that it expects energy costs to drive consumer price inflation past 15% next year.

Wage rises are failing to keep up. Real pay for UK workers suffered its biggest drop in more than two decades between March and May, official data showed last month.

Britons have tightened their belts in response, spending less in supermarkets and ditching their streaming subscriptions.

Global natural gas prices started rising last year as the world's economies reopened from their pandemic lockdowns, causing demand to spike. Skyrocketing costs have fed into consumer prices.

Russia's invasion of Ukraine in late February — and subsequent oil and gas supply disruptions — has only made matters worse, helping to push fuel prices up to record highs.

UK households are struggling. The average annual energy bill has risen 54% this year to hit £1,900 ($2,300), with further increased almost certain.

According to research firm Cornwall Insight, the average yearly bill for millions of households will soar by another 83% from January to top £3,600 ($4,380). That's £300 ($365) a month spent on gas and electricity.

Average energy bills in the United Kingdom could top £500 ($613) for January alone, according to a new report from consultancy BFY Group.

Anti-poverty campaigners have been sounding the alarm for months.

About two-thirds of all low-income families have gone without essentials such as heating or taking showers this year, according to a June report by the Joseph Rowntree Foundation.

A looming recession could make matters worse, ushering in a wave of job losses. Fears of an economic slowdown intensified in June when the Organisation for Economic Cooperation and Development said it expected the UK economy to stagnate next year — the only nation among the G7 to do so.