Inflation pushed back up to double figures as Govt warned abandoning pension pledge would be 'devastating'

19 October 2022, 07:03 | Updated: 19 October 2022, 09:41

Inflation has increased again, driven by high food prices, stoking fears about whether pensions will increase in line with it
Inflation has increased again, driven by high food prices, stoking fears about whether pensions will increase in line with it. Picture: Alamy/Datawrapper

By Daisy Stephens

Inflation has surged to double figures again amid growing fears the government could be set to abandon its pledge to increase pensions in line with the figure - something charities say would be "devastating".

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In July inflation - the rate at which prices increase - reached a 40 year high of 10.1 per cent before easing slightly in August, to 9.9 per cent as a result of falling petrol prices.

But figures from the Office of National Statistics (ONS) released today show it crept up again in September.

Economists earlier predicted a 10 per cent rise - meaning today's figure is slightly higher than analysts were expecting.

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Foreign Secretary James Cleverly said he understood inflation was "of great concern" but claimed the government was already taking action - although acknowledged he wanted the figure to be lower.

"Obviously, we’ve seen the inflation figures - it’s not where we want them to be - nudging just over 10 percent is something that will understandably be of great concern to a whole load of people that have mortgages or other kinds of borrowing," he said.

"We want to take action to bring those figures down but it's worth remembering that in many of our international competitors and friends they are already seeing inflation figures considerably higher than that.

"The decision we took to help people and businesses by putting a cap on the cost of energy has actually had a downward pressure on those inflation figures. They're not where we want them to be. We want them to come down further."

Inflation is at historically high levels
Inflation is at historically high levels. Picture: Datawrapper/Office for National Statistics

The figure for September was driven primarily by food prices, which reached 14.6 per cent - a 42-year high.

ONS director of economic statistics Darren Morgan said: "After last month's small fall, headline inflation returned to its high seen earlier in the summer.

"The rise was driven by further increases across food, which saw its largest annual rise in over 40 years, while hotel prices also increased after falling this time last year.

"These rises were partially offset by continuing falls in the costs of petrol, with airline prices falling by more than usual for this time of year and second-hand car prices also rising less steeply than the large increases seen last year.

"While still at a historically high rate, the costs facing businesses are beginning to rise more slowly, with crude oil prices actually falling in September."

Food prices are behind the latest increase
Food prices are behind the latest increase. Picture: Alamy

The figures were released amid growing concern Prime Minister Liz Truss is set to abandon the pension triple-lock - the mechanism by which pensions rise each year in line with inflation, average earnings growth, or 2.5 percent, whichever is higher.

Age UK's charity director Caroline Abrahams said abandoning the measure would be "devastating" and a "flagrant breach of trust".

"The rising rate of inflation announced today only strengthens the case for reinstating the triple lock which, let's not forget, was introduced to protect pensioners from the kind of hardship that many are facing now, and that even more will face over the next few months."

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She said older people were already risking their health by switching off essential medical equipment, lights, heating and fridges "because they worry worse is to come".

"If the Prime Minister decides to break her triple lock promise it would be devastating for the millions of older people who rely on the state pension, which is only worth about £9,000 a year on average anyway, as their main source of income.

"Knowing their state pension would keep pace with rising prices because of the triple lock has given precious hope to many older people at a time of great anxiety; for the Government to take that away from them now would be a hammer blow, as well as a flagrant breach of trust."

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Foreign Secretary James Cleverly refused to say whether or not the Government was keeping the triple-lock, saying it was something Chancellor Jeremy Hunt would address in his speech on Halloween.

"The triple lock was a manifesto commitment which is something we take incredibly seriously," he told LBC's Nick Ferrari at Breakfast.

"People want certainty, I totally get that.

"Pensioners will see their bills going up, and they will want certainty... but I'm sticking to the long-standing convention that this is something that will be addressed by the Chancellor in his statement."

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Responding to the figures, Mr Hunt said the Government "will prioritise help for the most vulnerable while delivering wider economic stability".

"I understand that families across the country are struggling with rising prices and higher energy bills," he said.

"This Government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.

"We have acted decisively to protect households and businesses from significant rises in their energy bills this winter, with the Government's energy price guarantee holding down peak inflation."

Chancellor Jeremy Hunt insisted he understands the struggles families are facing with rising costs
Chancellor Jeremy Hunt insisted he understands the struggles families are facing with rising costs. Picture: Alamy

But shadow chancellor Rachel Reeves said the "damage has been done" and the UK's financial credibility needed to be restored.

"Inflation figures this morning will bring more anxiety to families worried about the Tories' lack of grip on an economic crisis of their own making," she said.

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"It's clear that the damage has been done. This is a Tory crisis, made in Downing Street and paid for by working people.

"The facts speak for themselves: mortgage costs are soaring, borrowing costs are up, living standards down and we are forecast to have the lowest growth in the G7 over the next two years.

"What we need now is to restore financial credibility and a serious plan for growth that puts working people first. That is what Labour will bring."