Inflation rise will affect benefits for millions

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The Independent Online

Today's rise in inflation will have a knock-on effect for millions of people on state benefits.

The headline Retail Prices Index (RPI), which hit 5 per cent last month, is usually used by the Government to fix the increase in state pension the following April.

According to official figures, 11.9 million people claim the basic state pension - 3.7 million couples and 4.5 million single households.

A 5 per cent rise would add £4.54 to the current £90.70 basic state pension next year when the Government confirms the increase in December's uprating statement.

During the current year, the Department for Work and Pensions is spending £47bn on the basic state pension.

A 5 per cent hike on this figure would mean the Government having to find a extra £2.35bn at a time when revenues are under pressure from a deepening slowdown.

But the National Pensioners Council called for an immediate hike after June figures showed 2.5 million pensioners officially living in poverty - defined as 60 per cent or less of the average weekly household income of £377 - before housing costs.

The NPC is staging a national rally next week calling for the state pension to be increased from £90.70 to the official poverty line of £151.

Help the Aged added that the inflation rate experienced by the UK's oldest and poorest pensioners was actually nearer 9 per cent.

Special adviser Mervyn Kohler said: "Although 5 per cent is large by the standards of recent years, it totally fails to reflect the dramatic increases pensioners are facing in food and fuel.

"With inflation sky-rocketing and the increase in the basic state pension not coming into effect for another six months, many older people will be forced to cut back on essential items to get through the winter."

Joe Harris, general secretary of the NPC, contrasted the plight of the UK's poorest pensioners with the billions pumped in by the Government to bail out the UK's biggest banks during the past week.

He said: "At a time like this, pensioners will be disgusted that bankers are being offered up to £500bn, whilst they will get less than a £5 increase in their pension next year."

Pensioners account for almost a quarter of the 10.7 million people officially defined as in poverty in the UK.