The Consumer Price Index rose by 1 per cent in the year to September 2016 compared to 0.6 per cent in the year to August 2016, according to the Office for National Statistics.
It is the first time the index has hit 1 per cent since November 2014. The ONS said the main upward contributors to change in the rate were rising prices for clothing, overnight hotel stays and motor fuels, and prices for gas, which were unchanged, having fallen a year ago. These upward pressures were partially offset by a fall in air fares and food prices.
Commenting on the announcement Punter Southall principal Joanne Livingstone said: “The all-important CPI and RPI figures for September 2016 have been published and are an annual increase of 1 per cent for the former and 2 per cent for the latter. These figures are significant as they will determine the amount of increase applied for many pensioners next year.
“They also highlight the marked difference between RPI and CPI with the former being consistently higher due in large part to the construction of the two indices. The government has largely changed its reference inflation index to CPI for its own pension purposes although it continues to need to honour and indeed choose to issues more RPI based gilts.
“Whether or not schemes can make a similar switch in respect of past occupational scheme promises is largely an accident of the wording used to set up the scheme in the first place though. We estimate that it might make approximately £100bn difference to pension liabilities across Britain’s DB schemes.
“Hence it is not surprising that over 90 per cent of small schemes support such a move (according to an ACA survey) – something mooted as part of the remit which the new Select Committee enquiry chaired by Frank Field will consider.”
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