The Bank increased the base rate to 4.5% from 4.25% on 11 May, the 12th consecutive rise.

The late payment and repayment interest rates follow this rise and are applied to the main taxes and duties that HMRC currently charges and pays interest.

The late payment interest rate will increase by 0.25% to 7% from 31 May. This is the highest rate since the start of the financial crisis in November 2008.

Late payment interest is payable on late tax bills covering income tax, national insurance contributions (NICs), Capital Gains Tax (CGT), corporation tax pay and file, Stamp Duty Land Tax (SDLT), stamp duty and stamp duty reserve tax. The corporation tax pay and file rate increases to 6.75%.

Repayment interest will also be increased from the current 3.25% rate to 3.5%. 

Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments rises to 5.25% from 5%.

The fall has been attributed to energy price rises slowing from their hikes in 2022.

However, the data also showed that food prices continued to rise at the fastest rate in almost 45 years, although prices of food staples such as milk, eggs and bread have fallen.

Commenting on the data, Grant Fitzner, Chief Economist at the ONS, said: ‘If you look at what prices businesses are facing and how much they’re paying for domestic food materials, that has come down from over 15% annual last month to under 10% this month.

‘Of course, those aren’t reflected on supermarket shelves yet.’

Meanwhile, Chancellor Jeremy Hunt commented: ‘The IMF said… we’ve acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast.

‘So as well as helping families with around £3,000 of cost-of-living support this year and last, we must stick resolutely to the plan to get inflation down.’

The average household will still pay almost double the rate for their gas and electricity than before costs started to soar.

Around 27 million households can expect a modest drop in energy bills this summer after Ofgem lowered the cap on the typical annual dual-fuel tariff to reflect a steep drop in global energy prices over recent months.

From July when the change takes effect, households will see their average gas and electricity bill fall from the £2,500 a year level set by the government’s Energy Price Guarantee (EPG).

Jonathan Brearley, CEO of Ofgem, said: ‘After a difficult winter for consumers it is encouraging to see signs that the market is stabilising and prices are moving in the right direction.

‘We know people are still finding it hard, the cost-of-living crisis continues and these bills will still be troubling many people up and down the country.

‘In the medium term, we’re unlikely to see prices return to the levels we saw before the energy crisis, and therefore we believe that it is imperative that government, Ofgem, consumer groups and the wider industry work together to support vulnerable groups.’