Benefits including Universal Credit and Personal Independence Payments (PIP) are likely to increase by less than expected in April.

The Department for Work and Pensions (DWP) benefits are usually hiked in April in line with September’s inflation data.

Analysts had expected the figure to be around 1.9 per cent, however new figures published today show that the inflation rate is at 1.7 per cent.

The slowdown was driven by a sharp slump in petrol prices and lower airfares.

ONS chief economist Grant Fitzner said: “Inflation eased in September to its lowest annual rate in over three years.

“Lower airfares and petrol prices were the biggest driver for this month’s fall.”

The Government has yet to confirm if the lower than expected inflation figure will be used to decide change in benefit payments, with the answer likely to be revealed during the Budget on October 30.

These are the benefits that usually rise in line with inflation:

  • Attendance allowance
  • Employment and support allowance
  • Housing benefit
  • Income support
  • Industrial injuries disablement benefit
  • Jobseeker's allowance
  • Maternity allowance
  • Pension credit
  • Personal independence payment
  • Statutory maternity/paternity/adoption/shared parental pay
  • Statutory sick pay
  • Tax credits
  • Universal credit

The inflation reading comes after separate ONS data released on Tuesday showed that UK pay growth eased back to its lowest level since mid-2022.

Economists have suggested that weaker pay growth and easing price inflation mean Bank of England officials are very likely to cut rates next month.

Matt Swannell, chief economic adviser to the EY Item Club, said: “With the momentum behind pay growth also having eased slightly in yesterday’s data, today’s release removes another potential obstacle to the MPC voting for a 0.25 percentage point rate cut at its November meeting.

“The key question now is whether the MPC will step up the pace of rate cuts at subsequent meetings, and this scenario would likely require further good news on pay growth and inflation.”