Meanwhile, separate data published yesterday confirmed that wages grew by 8.5% in the year to July, indicating the state pension is likely to rise in line with this earnings figure, bringing the full new state pension amount from £203.85 to £221.20 a week.
Becky O’Connor, Director of Public Affairs at PensionBee said: “Inflation stubbornly remained at the same level in September. With earnings generally rising at a faster rate and the cost of food coming down slightly, according to the ONS data, there may be more breathing space for those families who have had a pay rise - and possibly even a bit more money left at the end of the month. Those who haven't benefitted from a higher-than-inflation pay increase continue to remain squeezed.”
On the implications for the state pension
“The scene is set for another rise in incomes for pensioners in April - in line with earnings growth, which is now higher than inflation. Unless the Government breaks or alters the terms of the triple lock, this would be 8.5%.
“While the sustainability of the triple lock as a mechanism for state pension rises remains in doubt, there is little doubt that decent rises help to keep pensioners out of poverty. It’s unlikely the Government would risk losing votes over such a vital part of the state welfare system before a General Election. If inflation continues to fall substantially over the next year and the heat also comes out of wage growth, the impetus to reform the triple lock may also subside.”
For pension savers
“Long term inflation levels are important for pension savers, who depend on their pension investments growing by enough to beat inflation over the years they are contributing, to maintain spending power in retirement. Higher wage growth should mean those who are auto-enrolled will automatically be contributing more, which will help offset the impact of inflation on pot values.”
PensionBee has an inflation calculator, which shows the impact of inflation on pension pot values and what savers need to add to make up for it.
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