High September inflation increases welfare spending, but benefit recipients lose from new indexation rules

<p><p>Today the Office for National Statistics published the annual rates of inflation to September. These numbers are particularly important: September inflation figures are used to determine increases in personal tax and benefit parameters and public sector pensions at the beginning of the next financial year. </p><p>The fact that inflation rates are above those previously expected by the Office for Budget Responsibility will add roughly £1.8 billion to welfare spending next year.</p><p>But the fact that benefits will be increased by inflation measured by the Consumer Prices Index rather than that measured by the Retail Prices Index or the Rossi index, as happened until last year, means that many benefit recipients will be worse off than they would otherwise have been. Over time this change will prove to be the biggest change to welfare system so far implemented by the government.</p> </p><p></p>