The September CPI figure has been announced and is 2.4%, down from the six-month high of 2.7% in August. The main drivers of the move down in CPI were largely the same as those which pushed inflation up last month – theatre shows, food, sea fares and clothing – offset in part by upward pressure from energy prices and computer games.
This particular month’s figure is becoming increasingly important. It is now used:
- To determine increases to many state benefits from the following April;
- To set statutory increases for pensions in payment for private sector Defined Benefit schemes (subject to the usual 2.5%/5% caps) where RPI is not ‘hard-wired’ into scheme rules;
- As the basis for increases in deferment and payment for public sector pension schemes;
- In the calculation of the deemed increase in the value of a Defined Benefit member’s pension rights each tax year for annual allowance purposes;
- To increase the Lifetime Allowance (LTA) for pension purposes, the 2.4% CPI figure means that the LTA will be £1,054,720 from next April.
Thanks to the Triple Lock method which guarantees that the State Pension will increase in line with the highest of inflation, earnings or 2.5%, pensioners will get an inflation-busting rise in line with July’s average weekly earnings growth (2.6%) next year with the weekly state pension going from £164.35 to £168.60.