Benefits are expected to increase by around 10% next year, it has been announced. The government has confirmed that state benefits and pension will increase in line with consumer price inflation (CPI).
With households struggling to cope with the soaring cost of living, The Telegraph reports that six million people will see their benefits increase in line with inflation. This year, benefits have increased by 3.1%, a figure that has been exceeded by the rise in prices.
The government has said it will reinstate the so-called “triple lock” on the state pension, which was suspended this year. The triple lockdown commits the government to increasing state pensions by whichever amount is greater based on inflation, wage growth or 2.5%.
READ MORE: State pensions set to rise by double digits as triple lockdown returns – here’s when they will rise
The CPI rose 9.1% in the 12 months to May, official data showed this week. Inflation is expected to hit 10% this year, putting a strain on household finances in many cases.
The exact rate at which benefits and the state pension will increase will depend on the CPI rate in September. Each year, benefits and pensions generally increase in April according to the rate of inflation recorded in the previous September.
“Subject to the Secretary of State’s review, pensions and other benefits will be boosted by the September Consumer Price Index which is currently forecast to be significantly higher than the forecast inflation rate for 2023. /24,” said Simon Clarke, Chief Secretary to the Treasury, in the House of Commons.
However, the government opposes wage increases in line with inflation. Around 40,000 Network Rail workers have been on strike this week demanding a more generous pay offer, among other things, only for the government to insist that it accept a pay deal below inflation.
The government has been forced to deny that raising benefits and pensions based on the CPI will further fuel inflation. However, the Treasury continues to insist that widespread wage increases in line with inflation would risk causing a “wage-price spiral”.
According to figures from the Office for National Statistics, wages in the UK are falling at their fastest rate in real terms for two decades. Real wages have barely increased since the global financial crisis of 2008, an unprecedented squeeze.
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