PIP and 11 other key DWP benefits set to rise by DOUBLE inflation

This will be a huge relief for claimants, who have seen their household incomes plunge in real terms this year, as inflation raced ahead of April’s increases. Next year, the annual uprating mechanism could work in their favour instead of against them.

Benefits paid by the Department for Work and Pensions are uprated each year in April, but the percentage increase is based on the inflation figure for September.

In September 2021 last year, inflation stood at just 3.1 percent, so key benefits increased by that amount in April 2022.

By then, consumer price growth had already jumped to 7.8 percent, which meant payments were actually worth less in real terms.

The Joseph Rowntree Foundation warned that as a result “around nine million households on means-tested benefits due to low incomes, both in and out of work, will experience an average real-terms cut of £500 per year”.

Low-income households with children would be even worse off, experiencing a “real-terms cut of £720 per year”.

Its calculations were based on an anticipated inflation figure of six percent for this year.

Their actual losses will be even higher as the Bank of England predicted inflation would hit 13.3 percent in October.

Yet now there is some good news.

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The September 2021 official consumer price growth figure did not reflect the inflationary storm heading our way this year.

This time round it could be a different story because inflation could peak in September 2022, and trail off after that.

So instead of getting a sub-inflationary rise from April next year, claimants could see their incomes jump in real terms.

Figures published yesterday showed that inflation slowed slightly in August, to 9.9 percent. That was the first drop for nine months but experts warned that this may only be temporary.

Nicholas Hyett, investment analyst at the Wealth Club said it is far too early to be celebrating victory in the war against rising prices. “Critical everyday items like food and home heating continue to get more expensive, sucking disposable cash out of consumer wallets.”

Inflation could be back into double digits in September but that may actually be good news for claimants of PIP and 11 other DWP benefits because this should deliver them a bigger increase next year.

Financial experts now reflect inflation to fall sharply after September, making that benefit rise go further.

Prime Minister Liz Truss’ move to freeze the energy cap at £2,500 from October could cut consumer price growth by four or five percent, the Government calculates.

Inflation is now set to fall to 5.2 percent in the second quarter of 2023, according to Capital Economics.

That quarter begins in April, when claimants are likely to get a double digit increase.

Around three million people claim PIP, which is aimed at people who need help with daily activities or getting around because of a long-term illness or disability.

The daily living part for those who need help with everyday tasks, pays a lower rate of £61.85 a week and a higher rate of £92.40.

The mobility part, for those who need help getting around, pays either £24.45 or £64.50 a week.

If inflation is 10 percent in September, the PIP higher rate of £92.40 will rise by £9.24 a week, lifting it to £101.64.

That will be worth an extra £480.48 over the year.

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A number of other benefits are also linked to September’s inflation rate.

These include disability benefits such as Attendance Allowance, Disability Living Allowance, Carer’s Allowance, Incapacity Benefit and Severe Disablement Allowance.

The annual uplift mechanism also applies to Jobseeker’s Allowance and the Employment and Support Allowance.

Pension Credit, paid to the poorest pensioners, is also uprated by inflation. It does not benefit from the State Pension triple lock.

The government also has discretionary powers to raise the rate of a range of other benefits each year, including Universal Credit, Income Support, and Housing Benefit.

This year they increased by 3.1 percent but with luck will also increase by September’s inflation figure in April.

September’s inflation figure is expected to be published on 18 October, and the DWP is likely to confirm upratings in November.

If inflation does fall as predicted, next year’s increase will feel a lot better than this one.

Although many claimants are still likely to feel aggrieved after suffering a year of hardship. 

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