The most recent inflation report was made public today, affecting numerous households receiving benefits and the state pension.
The inflation rate for September is a key factor in determining the upcoming adjustments to various benefits starting from April. Today, it was officially confirmed to remain at 3.8%, the same as the previous month.
While this rate applies to many recipients, including those on Universal Credit and state pension, they are likely to see larger increases in their benefits. The government is obligated to annually review benefit levels to ensure they keep pace with general price rises, typically using the inflation rate up to September.
In April of this year, several benefits like Universal Credit, Personal Independence Payment, Carer’s Allowance, Income Support, Housing Benefit, and Jobseeker’s Allowance increased by 1.7%, reflecting the inflation rate from September 2024. However, by this coming April, the same measure had risen to 3.5%.
The trend is expected to reverse this time around, with the September inflation rate peaking and likely to decrease by next April based on current projections. Confirmation from the Department for Work and Pensions (DWP) is awaited, with the benefit increase size varying depending on the specific benefits received.
Historically, the September inflation rate has been pivotal in determining benefit adjustments, suggesting a potential 3.8% increase for many benefits next April. Nine benefits mandated by the DWP to rise in line with inflation annually include Universal Credit, with changes already announced for April, such as the standard allowance rising by the September inflation rate plus an additional 2.3%.
The state pension, following the ‘triple lock pledge,’ increases each April in line with the highest of inflation, average earnings growth, or 2.5%. Given September’s inflation rate, the state pension is set to rise by £11 to £241 per week in April 2026 for most pensioners. Although individual amounts may differ, most new pensioners are expected to receive close to the full rate.
Experts highlight that while the increase in Universal Credit is a positive step, the real value of benefits has declined over the years due to inflation. Projections suggest a substantial increase in the total welfare bill next year, driven by higher-than-expected inflation impacting pension and other benefit payments.
Analysis indicates that unexpected inflation could result in a significant rise in the pensions and benefits bill, with estimates pointing towards a near £18 billion increase next year.
