The Consumer Prices Index (CPI) annual measurement of inflation fell to 1.2% in September, down from 1.5% in August, according to the Office for National Statistics.
Falls in transport costs, particularly sea and air fares, played a part in the inflation figure falling, as did price reductions for “a range of recreational goods”.
The Retail Prices Index measurement fell from 2.4% to 2.3%.
Why the September CPI figure matters
The September inflation figure is significant as a number of benefits are increased in line with the CPI figure in order to keep up with the cost of living.
These include:
- Personal Independence Payment;
- Attendance Allowance;
- Carer’s Allowance;
- The Support Group component of Employment and Support Allowance.
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What about the State Pension?
Increases to the State Pension are determined by the ‘triple lock’ guarantee.
The triple lock ensures that the State Pension will be increased each April by whichever of the following three things is highest:
- CPI measure of inflation (from the previous September); or
- average earnings; or
- 2.5%.
This low inflation figure, coupled with negligible increases in average earnings, means pensioners will receive a 2.5% increase in the State Pension.
The most that a pensioner can currently get is £113.10, so that should rise by £2.83 to £115.93.
What about ISAs?
ISA limits are also increased in line with this month’s CPI figure.
As a result, from next year the ISA limit should increase from £15,000 to £15,180.
However both the ISA and State Pension increase will not be formally confirmed by the Government until the Chancellor delivers the Autumn Statement in December.
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