Inflation slowdown hits benefits

Written By Unknown on Selasa, 16 Oktober 2012 | 16.50

16 October 2012 Last updated at 05:33 ET

The pace of price rises in the UK slowed in September, pushing the inflation rate down to its lowest level for nearly three years.

The Consumer Prices Index (CPI) measure of inflation stood at 2.2%, down from 2.5% in August.

The CPI level in September is usually used to work out the rise in a range of benefits from Jobseeker's Allowance to income support in April next year.

But the basic state pension will rise by a minimum of 2.5%.

This is the result of a government guarantee and would see the state pension increase by at least £2.69 a week.

The Office for National Statistics (ONS) said that the Retail Prices Index (RPI) measure of inflation, which includes mortgage payments, stood at 2.6% in September down from 2.9% the month before.

Energy bills

The final level at which other benefits will rise in April will be decided by Chancellor George Osborne. However, he is guided primarily by the September CPI inflation rate.

The CPI level was more than half the rate seen in September 2011, when it stood at 5.2%.

This meant that a variety of benefits, such as disability and maternity benefits, rose by 5.2% in April this year. So, the uprating of these benefits is likely to be much lower this April.

The chancellor has already said that he is likely to look again at the rise in Jobseeker's Allowance, as he was keen to see those in work seeing greater reward than those out of work.

The CPI rate of inflation was at its lowest rate since November 2009. However, gas and electricity price rises are expected to push it higher after four of the "big six" energy firms announced increased prices.


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