State pension increase of £473 for millions following new inflation figures

New inflation figures indicate that pensioners across the country could see their annual payments increase by as much as £473. It comes as data from the Office for National Statistics (ONS) revealed that Inflation in the UK fell below the Bank of England's target rate last month for the first time since April 2021, according to new data.

Consumer Prices Index (CPI) inflation dropped to 1.7% in September, down from 2.2% in August. This decrease was largely due to a significant drop in petrol prices and lower airfares. Analysts had predicted an inflation rate of 1.9% for the month, making the actual figure lower than expected.

The September figure is used by the Government to determine various tax and spending changes for the following year. As a result, UK state benefits are set to increase by 1.7% next year.

ONS chief economist Grant Fitzner said: “Inflation eased in September to its lowest annual rate in over three years. Lower airfares and petrol prices were the biggest driver for this month’s fall.”

Furthermore, it is anticipated that state pensions will rise by 4.1% in April next year, thanks to the triple-lock policy. .Generally, the triple lock systems increases pension in line with one of three things:

• Wages for May to July
• September's inflation figures
• 2.5%

The larger-than-expected fall in the inflation rate could put pressure on the Bank of England to reduce interest rates, which have been raised in recent years to bring inflation down to the 2% target. The central bank’s Monetary Policy Committee (MPC) will decide whether to cut interest rates – which influence mortgage and borrowing rates – from their current 5% level at a meeting next month.

Air travel costs also contributed to the decrease in the inflation rate, with post-summer sales leading to a 5% drop in this category. However, households experienced the first increase in food and non-alcoholic drink inflation since March 2023 last month.

Inflation for food and drink surged to 1.9% for the month, up from 1.3% in August, driven by steeper price hikes for milk, cheese, eggs and fruit.

Darren Jones, Chief Secretary to the Treasury, said: “It will be welcome news for millions of families that inflation is below 2%. However, there is still more to do to protect working people, which is why we are focused on bringing back growth and restoring economic stability to deliver on the promise of change.”