Bank of England predicts inflation to be 7.9% by Q3 next year: Here’s what that means for the state pension

4 November 2022

Yesterday, the Bank of England predicted that inflation was set to be 7.9% in Q3 of 2023. The state pension triple lock currently rises each year in line with the highest of three possible figures, inflation, average earnings or 2.5%. If it stays in place, the uprating will likely be determined by the September 2023 inflation figure. As a result, Quilter has calculated how much the state pension might be this year and next if the triple lock stays in place.

Figures (weekly rounded to the nearest 5p) below:

Jon Greer, head of retirement policy at Quilter says:

“The government will be weighing up at the moment whether they honour their manifesto promise of keeping the triple lock in place or opt to increase the state pension by a different measure in the face of a very difficult and uncertain economic outlook. However, the Bank of England today predicted inflation may have dropped to 7.9% in Q3 next year, which is broadly when the inflation figure is taken for the purpose of the triple lock, so keeping the triple lock in place may prove less expensive than first thought.

“Whether to keep the triple lock in place this year and next or ditching it altogether will be a difficult decision for Sunak and Hunt as pensioners across the country in the face of huge inflation will be hoping that it honours its previous commitment especially since they had a low increase in April 2022 when inflation was around 9%.

“The triple lock is proving to be a political hot potato for the government and Sunak will need to make a decision either way soon to help pensioners plan for their finances particularly at a time when finances are so front of mind.

“The triple lock does not work for everyone, and perhaps it may be time to assess whether there is a fairer way to raise the state pension while preventing more people slipping into the poverty net and having to choose between heating or eating."