State pension could hit £200 a week next year
The Consumer Prices Index (CPI) measure of inflation rose by 9.9% in the 12 months to August, according to the Office for National Statistics (ONS). This is down from a rate of 10.1% last month.
Next month’s CPI inflation figure is used as part of the triple lock for state pension. Under the triple lock the state pension is increased by whichever is highest of 2.5%, wages (from data published in September) or CPI (published in October).
Wages data issued yesterday showed growth in average pay of 5.5%. However, next month’s CPI inflation data is expected to be much higher than this so will likely be used to uprate state pensions.
Triple lock to be reinstated
Head of pensions at Aegon Kate Smith said: “With inflation into double-digits, average earnings of 5.5% isn’t expected to be the deciding factor in next April’s state pension increase.
“The state pension is likely to increase by around double this at over 10%, confirmed in September’s inflation figure published next month.”
The triple lock was suspended last year but new prime minister Liz Truss has pledged to reinstate it this year.
Some critics say the move is a mistake. For example, professor Len Shackleton, labour market expert at the Institute of Economic Affairs, said in June: “It may be difficult politically to renege on the triple lock again, but we should bear in mind that pensioners as a group are less likely to be in poverty than, say, families with young children. Support for struggling households could be better targeted than giving all pensioners, many of whom are relatively well-off, a big increase.”