Inflation matched its record high last month, official figures have revealed, hitting the Government with a hefty bill for increased state benefits and highlighting the tough conditions faced by households.
The rate of consumer prices index (CPI) inflation in September, which is used to determine next April’s rise in state benefits, rose from 4.5 per cent to 5.2 per cent, which equals the record high reached in September 2008, the Office for National Statistics (ONS) said.
Next year’s benefit rates are not formally unveiled until later this year, but this means the basic single state pension will increase by £5.31 to £107.46 a week, while the joint state pension will increase by £8.49 to £171.84.
Employment benefits, such as jobseeker’s allowance (JSA) and income support are also calculated using the September CPI rate, meaning JSA will increase by £3.51 to £71.01 a week.
The higher-than-expected surge was driven by a jump in utility bills, as gas and electricity increased 13 per cent and 7.5 per cent respectively following price hikes from major energy providers, including Scottish & Southern Energy, E.ON, British Gas and Scottish Power.
Sir Mervyn King, governor of the Bank of England, which is tasked with keeping inflation down, is expected to mount a strong defence of the Bank’s handling of the economic crisi.