Inflation is set to hit 10.25 per cent by the end of the year, leaving people across the country struggling to buy common goods. With the planned re-introduction of the state pension triple-lock tied to inflation, this would also mean the biggest-ever pay rise for pensioners.
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The State Pension is set to rise to almost £10,600, an increase of almost £1,000, if Chancellor Rishi Sunak’s planned re-introduction of the pension triple-lock goes ahead. The triple-lock ties the State Pension to increase by either average earnings, inflation or 2.5 per cent – whichever is highest.
Under the Bank of England ‘s latest forecast for inflation in the year’s fourth quarter, the cost of common goods is set to increase by 10.25 per cent. If the triple lock is restored next year, this would mean an increase of £962.78, bringing it up to £10,590.58 per year.
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With rocketing energy costs and a more expensive weekly shop, much of this increase will be eaten up by the rising cost of living, though economists have stated this will be a pay rise in the longer term, as inflation is forecast to fall in 2023.
Laith Khalaf, head of investment analysis at AJ Bell, said: “The Bank of England is now forecasting that inflation will run at 6.6 percent next year.”
Claimants of the State Pension will be buoyed by the promised re-implementation of the triple-lock, as April saw Chancellor Sunak announce just a 3.1 per cent increase in the benefit, despite the cost of goods increasing at twice the rate.
Those on the old basic State Pension, people who retired before April 6, 2016, will get the same percentage uplift. However, this will be on a smaller sum, as the old State Pension is lower.
Labour’s Jonathan Ashworth said “pensioners have been betrayed by Boris Johnson ” over the decision to not immediately re-introduce the triple-lock – as many are facing energy bill increases of up to 54 per cent.