The recent inflation figure for September, reported at 3.8%, is anticipated to have significant implications for financial matters affecting many individuals. This figure reflects price changes over the past year and is crucial in determining benefit adjustments for the coming year and potential Bank of England interest rate decisions.
September’s Consumer Prices Index (CPI) typically serves as a benchmark for increasing benefits in April. Key benefits, such as disability benefits and carer’s allowance, will legally increase in line with inflation. For Universal Credit (UC), currently claimed by approximately 7.5 million people, there is an expectation of a rise of about 6.2%, which includes the inflation rate and an additional government-mandated uplift. This could result in increases for single claimants from £92 to £98 per week, and for couples from £145 to £154 per week, according to calculations by the Joseph Rowntree Foundation.
In contrast, the state pension adjustment follows a different formula known as the “triple lock,” which adjusts based on the highest figure among 2.5%, inflation, or earnings growth. Due to an average earnings growth of 4.8%, the new flat-rate state pension is projected to rise from £230.30 to £241.30 per week, totaling £12,547 annually.
As inflation continues to impact daily finances, real pay growth remains a concern. The Resolution Foundation notes that real wage increases have stagnated, indicating that many workers are facing tighter budgets.
Speculations around interest rates are also prevalent. With inflation above the Bank of England’s 2% target but lower than expected in September, economists suggest potential interest rate cuts. Such cuts could reduce borrowing costs, including those associated with mortgages, potentially alleviating financial pressure on both homeowners and renters.
The upcoming Budget, set for November 26, will be closely monitored, especially as discussions around further tax and spending measures unfold in light of these inflation figures.
Source: https://www.bbc.com/news/articles/cm2ly7m07x8o?at_medium=RSS&at_campaign=rss