Interest rates have beene kept on hold for the third month in a row as the Bank of England continued its fight to keep inflation under control.
The Bank held borrowing costs at 5% despite mounting signs of economic gloom, prompting fears over a potential recession.
The "no change" call gives little respite to homeowners and borrowers already faced with soaring petrol, food and household energy bills.
But the widely-expected decision comes as the Bank's nine-strong Monetary Policy Committee (MPC) grapples with inflation well above its 2% target at 3.3% - and set to rise further still due to factors such as surging oil prices.
The MPC is facing a delicate balancing act between taming inflation and avoiding a sharp slowdown. Business leaders at the British Chambers of Commerce warned of a "serious risk" of recession this week.
The UK has also been hit by a fresh blizzard of poor news from the housing market - with builders axing around 5,000 jobs and today's Halifax survey showing a 2% fall in prices during June.
This is hitting consumer confidence as the impact of the credit crunch spreads to the wider economy.
Graeme Leach, the Institute of Directors' chief economist, said rate-setters were "caught between a rock and a hard place".
"At this point we believe it is correct to err on the side of caution with regard to inflation and leave rates unchanged.
"The MPC is acutely aware that if the inflation genie escapes from the bottle, it will be very hard to put it back in again," he said.
But recent downbeat survey data have added to the pressure on policymakers after signalling falling activity in services, manufacturing and construction sectors during June.
Lee Hopley, head of economic policy at the EEF manufacturers' organisation, said the MPC was right to keep inflation on hold for the moment.
But he added: "If further gloom descends and the economic downturn gathers pace, the Bank needs to be ready and willing to cut rates once again."
Among retailers, high street bellwether Marks & Spencer has also felt the pain.
It issued a shock profits warning following a miserable June as consumers tightened belts. Executive chairman Sir Stuart Rose described the group yesterday as an "early warning system" for the economy.
Bank governor Mervyn King was forced to write an explanatory letter to Chancellor Alistair Darling last month after the Consumer Prices Index rose more than 1% above the MPC's target.
It is the first in a series of such letters he is likely to have to write over the next year.
Oil prices have touched new records above 146 US dollars a barrel - heaping more forecourt misery on motorists - food product inflation has risen at a record pace, and households are also dealing with a round of gas and electricity bill hikes, with the prospect of more to come.
Mr King has said the MPC will judge interest rates on a month-by-month basis but insisted that the committee remains determined to control inflation in the face of outside pressures, such as the soaring commodity costs.
This will put growing pressure on stretched household budgets for the next year as the growth in families' standards of living slows sharply, he warned.