Inflation held at 3.8 per cent in August, figures from the Office for National Statistics (ONS) showed, with experts warning it could climb to 4 per cent in September - the key month, alongside earnings growth, used to set next year’s state pension rise under the triple lock.

The triple lock, introduced in 2010, guarantees that the state pension rises each April in line with the highest of inflation, average earnings growth, or 2.5 per cent.

This update follows ONS wage growth figures, published yesterday, which suggested that the state pension is likely to increase by around 4.7 per cent in April 2026, taking the new state pension to £12,534 per year.

With average earnings growth now predicted to be the higher of the two figures, Standard Life managing director for retail direct, Dean Butler, said it looks likely that wages will determine next year’s rise.

However, experts have warned that strong earnings growth could push more people above the personal allowance threshold, potentially increasing both government pension costs and tax contributions.

Hargreaves Lansdown, head of retirement analysis, Helen Morrissey, said that although there were “no nasty surprises” in the inflation data, the expectation remains that it will rise to 4 per cent in September.

She described next month’s inflation reading as the “final piece in the triple lock puzzle” and, unless there is an “enormous spike”, the likelihood is that the average wage figure will be the figure used.

“This puts pensioners in line for an inflation-busting 4.7 per cent uplift from April next year,” she said.

"Such an increase would see a full new state pension rise from its current level of £230.25 per week to £241.05 per week from April. The final increase is expected to be confirmed in November’s Budget.”

Broadstone head of policy, David Brooks, added that this increase would push the full new state pension close to the personal allowance threshold, highlighting the potential impact on both government costs and household finances.

Morrissey also pointed out that this rise will add to the government’s “ongoing headache” of how to manage the swelling state pension bill.

Morrissey noted that although the Labour government is committed to retaining the triple lock until the end of the parliament, its future remains uncertain after this term.

In addition, she highlighted the ongoing state pension age review as another "headache" the government is facing before the Budget. Morrissey said she “could see the age at which we receive this important benefit creep up further and at a faster rate”.

Quilter investment strategist, Lindsay James, echoed these concerns, noting that for the government, stubborn inflation complicates the fiscal outlook.

“Elevated benefits indexation and higher debt interest payments from the UK’s large stock of index-linked gilts mean the Chancellor will have even less room for manoeuvre when she delivers the budget at the end of November,” James continued.

“That reality will shape how Labour balances fiscal credibility with its policy ambitions.”

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