Today’s surprise jump in inflation means that despite a double digit increase to state pension in April, this benefit is still failing to keep up with prices.
Although many forecasters were expecting inflation to fall this month, latest ONS figures show prices are rose by 10.4 per cent in February. This latest rise is being driven by higher food prices, caused by shortages of some items.
In April the state pension will increase by 10.1 per cent, the highest rise for a decade. Inflation is widely expected to fall later this year. Under the triple lock pensions are increased by whichever is higher: average earnings increase, inflation (as measured by September CPI figures) or 2.5 per cent.
Aegon pensions director Steven Cameron says: “Today’s inflation figure which has increased to 10.4 per cent for the year to February is an unwelcome move in the wrong direction from the 10.1 per cent rate in January.
“It comes just days before state pensioners will receive a 10.1 per cent increase as a result of the ‘triple lock’, meaning their pensions will just fall short of keeping up with prices.”
He pointed out that in the Budget last week, the chancellor predicted that inflation would fall to 2.9 per cent by the end of the year. Cameron adds: “This would be great news for everyone struggling with the cost of living crisis. But the increase means we’ll need an even more dramatic fall from today’s position to achieve this.
“For state pensioners, the triple lock if maintained would use the inflation rate to this September, which depending on the months ahead, could be far lower. However, it could be that earnings growth begins to outstrip inflation with the triple lock then based on this. The earnings figures used are the year on year increase for the period May to July and the most recently announced figure here is 5.7%.”
