Treasury minister Andrew Griffith told Sky News the Government could not “make promises about spending or indeed tax cuts that can’t be financed and would put more pressure on inflation and, of course, interest rates“.
He declined to say whether the Government would hike benefits in line with the September measure of inflation, which is typically used as the key measure.
He said the assessment process is “yet to happen”, adding: “Last year we increased benefits by 10 percent to protect people, one of the largest ever increases.”
The UK rate of inflation stayed at 6.7 percent in September, the same rate as August, according to the Office for National Statistics.
It means prices are still rising at the same rate as the previous month.
Petrol and diesel costs kept inflation up, the ONS says, but food and non-alcoholic drink prices fell for the first time since September 2021.
For anyone claiming benefits, today’s September inflation number is very important for your finances as it is the benchmark for how much benefits will go up by in April.
The idea is that benefits rise in line with prices – and today’s CPI number is the one used in those calculations.
Certain benefits, must rise – by law – in April by this amount. They include disability benefits, carer’s allowance, incapacity benefit, severe disablement allowance, industrial injuries benefit, additional state pension and guardian’s allowance.
Other benefits, most significantly universal credit, are at the discretion of the work and pensions secretary in discussion with the chancellor.
Campaigners say that is a massive call, because benefits make up a bigger chunk of income the poorer people are.
In its annual health check of UK tax, spend and borrowing, the Institute for Fiscal Studies (IFS) says the country is “in a horrible fiscal bind”.
The IFS calculates that the tax revenue raised by the prime minister’s decision to freeze tax thresholds for six years is effectively a tax rise worth £52billion a year by 2028.
The very high rates of inflation since the policy was announced have pushed up the original forecast of £8billion a year for revenue raised in 2026.
Reacting to the latest figures, Chancellor Jeremy Hunt says “inflation rarely falls in a straight line”.
He pledged to stick to the government’s promise to get the main rate of inflation to five percent by the end of the year
