Retailers remain cautious as...
Inflation fall means £220 boost to state pension
The Consumer Prices Index (CPI) inflation rate fell from 2.7% to 2.4% in September, largely driven by lower prices for food and non-alcoholic drinks.
The index is used to set the state pension triple-lock uprating that guarantees the basic state pension will rise by a minimum of 2.5%, the rate of inflation or average earnings growth, whichever is largest.
Wages have begun to rise after stagnating for a decade, with average earnings growth at 2.6% in July. That figure will be used to boost the full flat-rate state pension from next April by £221 to £8,767.20 a year, a weekly increase from £164.35 to £168.60.
The lifetime allowance will increase in line with September’s CPI inflation figure, meaning it will go up by £24,800 to £1,054,720.
AJ Bell senior analyst Tom Selby says: “Today’s figures will provide a welcome income boost to millions of people currently in receipt of the state pension.
“With inflation returning to the economy, the value of protection against rising prices is not to be underestimated.”
The inflation figure is also used by the UK Government to calculate the non-domestic rates multiplier for the following year. In last year’s Budget the UK Government committed to set the rise in line with CPI, having previously used RPI. The Scottish Government also used CPI to calculate the Scottish non-domestic rates poundage in last year’s Budget.
Retailers warned last month of inflation’s impact on rates bills (Daily Business September 19)
If the Scottish Government take the same approach when it delivers its December budget, Scottish retailers will face an extra £16m on their annual business rates bill from April 2019. Ratepayers as a whole in Scotland would see a £73m leap in their rates bills.
Should the Scottish Government not repeat last year’s decision to limit rises to CPI, but instead use RPI (which is currently 3.3%), that £16m figure could rise to over £21m.
The anticipated increase is lower than was feared last month when the Scottish Retail Consortium warned that if the 2.7% inflation rate for August had been maintained it would have seen rates bills across the board rise by £80m and for retailers by £18m.