Inflation matched its record high last month, official figures have revealed, hitting the Government with a hefty bill for increased state benefits and highlighting the tough conditions faced by households.
The rate of consumer prices index (CPI) inflation in September, which is used to determine next April's rise in state benefits, rose from 4.5 per cent to 5.2 per cent, which equals the record high reached in September 2008, the Office for National Statistics (ONS) said.
Next year's benefit rates are not formally unveiled until later this year, but this means the basic single state pension will increase by £5.31 to £107.46 a week, while the joint state pension will increase by £8.49 to £171.84.
Employment benefits, such as jobseeker's allowance (JSA) and income support are also calculated using the September CPI rate, meaning JSA will increase by £3.51 to £71.01 a week. The higher-than-expected surge was driven by a jump in utility bills, as gas and electricity increased 13 per cent and 7.5 per cent respectively following price hikes from major energy providers, including Scottish & Southern Energy, E.ON, British Gas and Scottish Power.
Sir Mervyn King, governor of the Bank of England, which is tasked with keeping inflation down, is expected to mount a strong defence of the Bank's handling of the economic crisis in a keynote speech as part of the Monetary Policy Committee's visit to the north west of England on Tuesday evening.
The increase in state benefits will put more pressure on Chancellor George Osborne, who is battling to slash the nation's budget deficit, as unemployment hit a 17-year high of 2.57 million in the three months to August.
It will be the first time the uprating in benefits is calculated using CPI rather than the retail prices index (RPI) rate of inflation, which rose from 5.2 per cent to 5.6 per cent in September, which is the highest rate in 20 years. If the calculation was still based on RPI, the single state pension would have been £108.42 and the joint one would have been £173.36.
The CPI inflation rate also underlines the increasing squeeze on household incomes after figures last week revealed weekly earnings grew at just 1.8%. Housing, water, electricity, gas and other fuels increased 8.6%, the highest increase in two-and-a-half years, the ONS said. It also warned there would be further pressure from utility bills in October's figures as price hikes from EDF and Npower are introduced.
Downing Street confirmed that it was the usual procedure for September's inflation rate to be used to determine the uprating of benefit and pension levels. But the Prime Minister's official spokesman said it was a decision for the Chancellor each year whether to continue to apply this procedure.
Asked for David Cameron's response to the latest inflation figures, the PM's spokesman said: "We understand it is a difficult time for households who are affected by these price rises, which reflect what is happening to global oil and gas prices."
Inflation matched its record high last month, official figures have revealed, hitting the Government with a hefty bill for increased state benefits and highlighting the tough conditions faced by households.
The rate of consumer prices index (CPI) inflation in September, which is used to determine next April's rise in state benefits, rose from 4.5 per cent to 5.2 per cent, which equals the record high reached in September 2008, the Office for National Statistics (ONS) said.
Next year's benefit rates are not formally unveiled until later this year, but this means the basic single state pension will increase by £5.31 to £107.46 a week, while the joint state pension will increase by £8.49 to £171.84.
Employment benefits, such as jobseeker's allowance (JSA) and income support are also calculated using the September CPI rate, meaning JSA will increase by £3.51 to £71.01 a week. The higher-than-expected surge was driven by a jump in utility bills, as gas and electricity increased 13 per cent and 7.5 per cent respectively following price hikes from major energy providers, including Scottish & Southern Energy, E.ON, British Gas and Scottish Power.
Sir Mervyn King, governor of the Bank of England, which is tasked with keeping inflation down, is expected to mount a strong defence of the Bank's handling of the economic crisis in a keynote speech as part of the Monetary Policy Committee's visit to the north west of England on Tuesday evening.
The increase in state benefits will put more pressure on Chancellor George Osborne, who is battling to slash the nation's budget deficit, as unemployment hit a 17-year high of 2.57 million in the three months to August.
It will be the first time the uprating in benefits is calculated using CPI rather than the retail prices index (RPI) rate of inflation, which rose from 5.2 per cent to 5.6 per cent in September, which is the highest rate in 20 years. If the calculation was still based on RPI, the single state pension would have been £108.42 and the joint one would have been £173.36.
The CPI inflation rate also underlines the increasing squeeze on household incomes after figures last week revealed weekly earnings grew at just 1.8%. Housing, water, electricity, gas and other fuels increased 8.6%, the highest increase in two-and-a-half years, the ONS said. It also warned there would be further pressure from utility bills in October's figures as price hikes from EDF and Npower are introduced.
Downing Street confirmed that it was the usual procedure for September's inflation rate to be used to determine the uprating of benefit and pension levels. But the Prime Minister's official spokesman said it was a decision for the Chancellor each year whether to continue to apply this procedure.
Asked for David Cameron's response to the latest inflation figures, the PM's spokesman said: "We understand it is a difficult time for households who are affected by these price rises, which reflect what is happening to global oil and gas prices."