The most recent update on inflation was revealed today, affecting numerous households receiving benefits and state pensions. Inflation figures for September play a crucial role in determining the upcoming April’s benefit raises, with the latest rate confirmed at 3.8%, unchanged from the previous month.
While many recipients, particularly those on Universal Credit and state pensions, are anticipated to receive higher increases than the overall inflation rate, adjustments are made annually by the government to ensure benefits keep pace with rising general prices, typically using the inflation rate from the preceding September.
In contrast, the inflation measure in April 2024 was 1.7%, impacting benefit rises earlier this year. However, by April 2025, the same measure had surged to 3.5%. It is predicted that the current peak in September’s inflation rate may decrease by next April, pending confirmation by the Department for Work and Pensions (DWP) and depending on the specific benefits received.
Historically, the September inflation rate has been instrumental in determining benefit upratings, hinting at a potential 3.8% increase for many benefits next April. The DWP is mandated to adjust nine benefits annually in line with inflation, subject to Parliamentary approval for other benefits.
Under the new welfare reforms effective from next April, changes to Universal Credit include a rise in the standard allowance by the September inflation rate plus an additional 2.3%. For instance, the standard allowance for singles is expected to increase from £92 to £98 per week, and for couples, from £145 to £154 per week.
Conversely, new claimants with long-term health conditions or disabilities may see a reduction in the “limited capability for work-related activity” element payment from April. The state pension, aligned with the ‘triple lock pledge,’ is projected to increase in April 2026 by £11 to £241 per week due to lower inflation rates compared to average earnings growth.
Experts note that while the Universal Credit standard allowance rise is a positive step, it may not fully alleviate financial strains for households facing escalating costs in essentials like rent, childcare, and energy. The Resolution Foundation highlights a 10% decline in the real value of the standard allowance since 2012/13 due to inflation spikes.
Forecasts by the Office for Budget Responsibility suggest an increase in the total welfare bill next year, primarily driven by state pension and other benefits, with higher-than-expected inflation potentially adding billions to pension and benefit expenses, as per the Institute for Fiscal Studies’ analysis.