Connected Research

Union policy research in the 21st century

September RPI published

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The September inflation figures have been published by National Statistics: the formal picture is that the Retail Price Index slipped further, to -1.4%, while the Consumer Price Index, the measure used by the Bank of England as a context for its monetary policy, fell to 1.1%.

The largest single factor affecting this month’s figures compared to those of August is the spike in energy prices last year, which saw power suppliers put their prices up in September 2008, while energy bills were this year unchanged between the two months.

Ten of the fourteen groups of items in the consumer basket rose on an annual basis by more than the headline RPI rate, led by leisure services (a year-on-year rise of 4.8%) and household goods (4.5%), but these were heavily outweighed by the 11.2% drop in housing costs and the 7.9% drop in fuel and light.

You can find a useful historic look at inflation, dating back to 1948, here.

The September figures are important ones as they are traditionally used to guide next year’s rises in pensions, both in the state pension and for pensioners of occupational schemes. The basic state pension will rise next April by £2.40 per week, to £97.65, following the government’s promise that the 2010 pension would rise by the higher of RPI or 2.5%. Figures traditionally show that, while the level of inflation differs from group to group as a result of typical spending patterns, it hits pensioners hardest.

A negative RPI in September means that members of occupational schemes – including the hundreds of thousands of pensioners in Sections A and B of the BTPS – are unlikely to see rises in their occupational pensions next April (though they are also unlikely to see them ‘reviewed negatively’ (or cut!) in line with the fall in inflation either).

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Written by Calvin

13/10/2009 at 11:48 am

Posted in Economic trends, Pensions

Tagged with , ,

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