The Consumer Price Index rose to 10.1% in September 2022, a return to July levels after a small fall to 9.9% in August.
Prices are currently rising at their fastest rate since 1980.
This month’s increase in inflation is being driven by a continuing rise in food and non alcoholic drinks prices, with this section of the price index having risen 14.5% in the last year.
These figures are particularly noteworthy because it is the September inflation number that traditionally dictates the annual rise of the state pension for next April.
Phoenix Insights believes that businesses must invest in older workers and midlife workers to unlock economic growth.
HRH the Princess Royal is the new patron of BASC
The Conservative party manifesto contained a commitment to maintain the so called ‘tripple lock’ on increasing the state pension with the higher of earnings or inflation.
However, with the new Chancellor Jeremy Hunt seeking to curb public spending in order to reduce government borrowing, the prime minister’s official spokesman yesterday refused to guarantee that pensions would this year rise with inflation.
The think tank, the Resolution Foundation has suggested that only raising pensions in line with earnings, rather than the Consumer Price Index, has the potential to save the public finances some £6 billion a year.
Politically, however any failure to raise the pensions to keep pace with inflation will be problematic for government.
Numerous Conservative MPs like Stephen Crabb and Maria Caulfield have already stated publicly that they won’t support any move. It is unlikely that the government could pass such a measure through Parliament because of the possibility of a parliamentary revolt by Conservative MPs.
The government must also be prepared to raise Universal Credit to keep up with inflation, given the recent rise in inflation.
Writing on Twitter this morning, the Green MP Caroline Lucas, highlighted how her local Citizen’s Advice Bureau in Brighton has seen a 280% increase in people in financial distress since July, saying ‘Hunt can and must increase benefits with inflation. Refusal to do so will cost lives”.
The Bank of England stated previously that it expects UK inflation will peak at 11% in Oct., before dropping back to 2023.
Inflation is not only a problem in the UK. The current inflation rate in Germany is also at 10%. It stands at 9% in Ireland and 8.5% in America. And 6% in France.
Twelve months ago in September 2021, UK inflation was just 2.9%.