State pensioners on track for bumper pay rise as inflation hits new 40-year high | Personal finance | Finance

Inflation is at its highest level since February 1982, when the consumer price index (CPI) reached 10.4%, according to estimates by the Office National Statistics (ONS). James Jones-Tinsley, technical specialist in self-invested pensions at Barnett Waddingham, said the rate suggests the new Prime Minister faces a “pension tightrope” in September. “The 0.9% rise beats expectations that inflation could rise to 13% in the coming months.

“Calls for targeted support for the most vulnerable are already growing, with pensioners, who typically have fixed incomes and higher fuel bills, among the hardest hit.

“Under the current double lockdown, increases in state pensions over the past year have been only a third of the CPI, making it difficult to maintain their standard of living. But restoring the triple locking in state pensions will make life better in the short term at least.

“The two-month countdown has now begun for the September CPI figure to be released in October, which will tell us whether we could be looking at a double-digit increase in April 2023, once a decision is made. taken from state pensions.

“But such moves could fuel inflation further and run counter to promises of increased fiscal responsibility across the economy. This could be a bitter pill for the next prime minister to swallow, especially after torpedoing inflation and cutting pay rises for public sector workers for the same reasons.

READ MORE: State pension set to rise next year, but 520,000 people will miss out

The CPI rate for the year to September 2022 will be used to determine the inflation element of the triple lockdown as well as the increase in benefit payments.

The Bank of England (BoE) has predicted that inflation could reach 13% by the end of the year.

However, he predicts that inflation will exceed 11% in October, the month after the critical figure in September.

Pensioners are concerned about the current state pension rate as the cost of living continues to rise, particularly with energy bills set to rise to over £4,200 by January next year .

Becky O’Connor, Head of Pensions and Savings, Interactive Investor, said: “Energy bills could end up eating up more than half of retirees’ state pension income by the end of the year. It’s completely unmanageable if people are going to be able to continue to feed themselves.

The average weekly state pension payment was £159.81 in February this year, or £8,310 a year. A rise in energy bills to £3,582 in October would mean energy costs would make up 43% of average pensioner income this autumn. It would leave those on state pensions with just £90 a week to spend on food, petrol and other basic living expenses, such as clothing, home maintenance and the car.

Chancellor of the Exchequer Nadhim Zahawi said: “I understand that times are tough and people are worried about the price increases that countries around the world are facing.

“Although there are no easy solutions, we are helping where we can through a £37billion support package, with additional payments for those on the lowest incomes, pensioners and people with disabilities, and £400 off energy bills for everyone in the coming months.

“Taking inflation under control is my top priority, and we are taking action through strong and independent monetary policy, responsible tax and spending decisions, and reforms to boost productivity and growth.”

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