Consumer price inflation rebounded from 9.9% in the year to August to 10.1% for the year to September
UK inflation rebounded last month, with implications for pensions and business rates next spring.
Consumer price inflation rebounded from 9.9% in the year to August to 10.1% for the year to September, a particularly important reading as it contributes to the government’s calculation for how payments of state pensions and benefits will rise.
Normally September’s measure of inflation is used as the basis for uprating rises in pensions in the following April under the ‘triple lock’, as well as for benefits and tax credits.
There has been speculation that Downing Street could U-turn on the longstanding triple-lock promise amid surging inflation and new chancellor Jeremy Hunt’s push to curtail government spending.
At Prime Minister’s Questions today, Liz Truss said she was ‘completely committed’ to the triple lock, which commits to pension payments rising by whatever is higher: price inflation, average earnings or 2.5%.
Last year the triple lock was suspended and replaced by a 3.1% increase given instead, which was well below CPI, which started the year at 5.5% and has been above 9% since April.
Chancellor Hunt is expected to confirm the pension and benefit changes in his financial statement due on 31 October.
If September’s 10.1% CP figure is used, then the full new state pension would increase by £18.70 per week to £203.85, while the basic state pension would rise from £141.85 per week to £156.20.
If Hunt used wage growth instead, this would see a 5.5% rise, equating to state pension payments of £195.35 and basic state pension of £149.65.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said giving pensioners a weekly income of over £200 per week at a time when people’s budgets are severely squeezed ‘will be welcome’ but the comments from Downing Street means we have ‘a nervous wait over the next few weeks until benefits uprating is confirmed’.
Myron Jobson, personal finance analyst at Interactive investor, said: The triple lock policy has become a symbol for doing right by older people, but with public finances at its most stretch since the post-World War Two era these are worrying times for current and future generations. The situation has been made worse by the soaring cost of seemingly everything from the cost of groceries to energy bills.