The British Chamber of Commerce has warned of a threat of deflation as the Bank of England (BoE) decided to keep rates on hold for the 11th consecutive month.
"Prices are falling in a number of industries, and we urge the BoE to be wary of the threat of deflation, which could compound the economy's problems," said Mr David Frost, the organisation's director general.
The BoE, he said, "must be ready to act in future if this threat persists."
The bank announced its Monetary Policy Committee has decided to hold its repo rate at 4 per cent for the 11th month running.
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The BoE previously cut rates by a cumulative 100 basis points since the September 11th attacks on the United States in an attempt to shore up British economic growth.