Bank of England policymakers have admitted that inflation is likely to be “several percentage points” higher than the 7.25 per cent it had previously forecast. Price growth is already on course to hit eight per cent by June and could top 10 per cent by the autumn.
The state pension should also rise in line with inflation next year, under the triple lock mechanism.
Pension is set to increase by almost £1,000 to £10,600 a year as inflation rockets, leaving Chancellor Rishi Sunak with a huge decision.
Introduced by the coalition government in 2010, the triple lock guarantees the state pension will rise either by 2.5 per cent, earnings or inflation, whichever is highest. From April, the new state pension will pay a maximum £185.50 a week, which works out as £9,627.80 a year. A 10 per cent inflationary uplift would increase that by an incredible £963 from April 2023 to £10,591 a year.
Under the triple lock, state pensioners would have received a pay rise of more than eight per cent from April 6. However, the Department for Work Pensions argued that earnings had been 'skewed and distorted' by the pandemic, and refused to pass it on. Instead, pensioners will get just 3.1 per cent rise next month.
The Resolution Foundation, the living standards think tank, said that increasing the benefits by 8.1% rather than 3.1% would give much help to low-to-middle income households. The suggestions came before Sunak made final preparations for Wednesday’s statement.
