September Inflation Data

The latest inflation numbers are not as important as they once would have been.

September’s retail prices index (RPI) figures, which emerged last month, would once have been the drivers for a variety of tax and benefit increases from next April. However, that is no longer the case. The Chancellor first moved over to the consumer prices index for most direct taxes and benefits, but has since chosen his own rate of increase. Thus:

The process of keeping many tax and benefit increases at below the inflation rate is a well-used Treasury tool for extracting more revenue from the public. At present it is not working quite as the Chancellor might hope because earnings growth is so low. The latest figures show an annual increase of just 0.7%.