The latest inflation figures for the UK were published this week by the Office for National Statistics (ONS). The main rate of inflation used in the UK is now the Consumer Prices Index (CPI). The CPI figure for the year to the end of September 2013 is 2.7% and is unchanged from the figure published for the 12 months to the end of August 2013.
This means that the price of a representative (and arbitrary) basket of goods was 2.7% more expensive on 30th September 2013 than it was on 1st October 2012.
The changes to the various categories of goods and services that make up the CPI index were relatively small compared with most months. The largest upward contribution came from air fares, though this was offset by a downward contribution from petrol and diesel prices – not that I’d noticed!
The CPI figure for September is important though as it is the basis for determining the annual increase for a whole range of state benefits and allowances from the following April. The Chancellor will base the increases of many state benefits and allowances on this figure when he makes his pre-budget report announcement to the House of Commons on 4th December 2013. Included in his speech will (almost certainly) be an increase to the basic state pension to £113.12 per week and an uplift of the annual ISA allowance to £11,880 per annum.
The Retail Prices Index (RPI) stands at 3.2% for the 12 months to the end of September 2013. This is down from 3.3% in the previous month. The RPI figure is used to calculate increases to some occupational schemes that are yet to make the switch to CPI.