Cheaper petrol keeps inflation at near 3-year low
Figures from the Office for National Statistics (ONS) show consumer price inflation (CPI) was 1.7 per cent last month, unchanged from August.
Cheaper motor fuel and second-hand car prices were offset by more expensive furniture, household appliances, and hotel stays.
The last time inflation was lower was in December 2016.
Ed Monk, associate director for personal investing at Fidelity International, said: “That price rises remained unchanged this month – and some way below wage rises – is good news for UK households, but it’s also a sign that the economy overall is struggling for steam.
“With inflation now apparently lodged below the Bank of England’s target, the next change in interest rates is more likely to be down than up, following the trend already set in Europe and the US.”
Wages continue to outpace inflation, with figures published yesterday showing earnings excluding bonuses grew at an annual pace of 3.8 per cent in the June-to-August period.
September’s inflation figures are particularly significant as they have important implications for pensions.
They are used in the ‘triple lock’ calculation which determines by how much the state pension will increase next April and they are used to set the increase in the lifetime allowance – the maximum which can be held in a pension without a tax charge.
Today’s announcement means state pensioners can expect an inflation-busting increase of around 4 per cent next year, while the lifetime allowance should rise from £1,055m to around £1,075m in April 2020 for defined contribution pensions.