UK inflation unexpectedly held at 6.7 per cent in September, still stubbornly above the Bank of England’s 2 per cent target, keeping the cost of goods and services at a low high and households under pressure.
The rise in oil prices during the month of September prevented the expected drop in price growth and caused the price of a liter of gasoline to rise at the pump. At the same time, the weakening of the labor market has led to an increase in unemployment. More positively, average wage growth increased at an annual rate of 7.8 percent between June and August, outpacing inflation for the first time in two years.
With the situation still “tense”, as Bank Governor Andrew Bailey put it, Threadneedle Street has so far resisted the urge to raise interest rates to 5.5 per cent as a form of response, preferring to keep them at 5.25 percent. The Bank’s Monetary Policy Committee is expected to do so again in November and is unlikely to feel able to start cutting rates before next spring.
“We still have work to do to get back to 2 percent,” Bank of England chief economist Huw Pill told think tank OMFIF on October 15.
“And we probably have some work to do to ensure that when we get back to 2 percent, we do it in a way that is sustainable over time.”
Chancellor Jeremy Hunt also offered a pessimistic assessment of the economy ahead of his autumn budget, in light of the outbreak of a new international conflict, while Paul Johnson, director of the Institute for Fiscal Studies, warned that Britain remained in “a horrible budgetary impasse”. and is heading towards a “moderate” recession in 2024, with no prospect of tax cuts or increased public spending on the immediate horizon.
All of this continues to create a frustrating picture for consumers, even though inflation is now well below the 40-year high it reached 12 months ago.
However, state financial assistance continues to be accessible to low-income households, of which here is an overview:
Final child support payment imminent
Despite the expiration of Rishi Sunak’s energy bill support scheme at the end of March this year (an initiative which distributed £400 in monthly installments of £66 and £67), millions of people on low income will receive extra cost of living support from the government worth up to £1,350 in total this calendar year.
Eight million eligible means-tested benefit claimants – including people on Universal Credit, Pension Credit and tax credits – will soon receive the next £300 Cost of Living Scheme payment as part of a program that began this spring, with the money going directly. to bank accounts in three tranches, the Department for Work and Pensions (DWP) said.
The payments will total £900 in total.
A separate payment of £150 has already been made for more than six million disabled people and an additional payment of £300 for more than eight million pensioners will be made this winter.
Here are the payment windows announced so far, with more specific dates for the final payments expected soon:
- £301 – First Cost of Living Payment – already issued between 25 April and 17 May (or 2-9 May for those on tax credits but not other low income benefits)
- £150 – Disability Allowance – issued between June 20 and July 4
- £300 – Second Cost of Living Payment – issued between October 31 and November 19 for most people
- £300 – Pensioner Payment – during winter 2023/4
- £299 – Third Cost of Living Payment – in Spring 2024
Benefits come out as usual
The usual state support in the form of benefit and pension payments will also be paid as normal in November, with no public holidays planned to disrupt delivery dates.
Anyone expecting to receive any of the following from the DWP can expect to receive their money on the usual date this month:
- Universal Credit
- State pension
- Pension credit
- Disabled allowance
- Personal Independence Payment
- Attendance allowance
- Child care allowance
- Employment support allowance
- Income support
- Job search allowance
For more information on how and when state benefits are paid, please visit the government website.
Energy price cap set to fall further
The relatively warm weather we experienced for much of October delayed the time when the central heating had to be turned on for the first time in months, a welcome development given that domestic heating bills have been revealed to be of great concern to many over the past winter. .
Meanwhile, the energy crisis that began to drive up electricity and gas prices a year ago has been largely brought under control and the government’s Energy Price Guarantee (EPG) – introduced by short-lived Prime Minister Liz Truss in September 2022 to ensure households pay nothing more than £2,500 for their electricity, with the government subsidizing the remainder owed to suppliers under the Energy Price Cap (EPC) d ‘Ofgem – ultimately became useless when the cap fell below £2,500 in July.
At this point, with a dramatic 17 per cent decrease from £3,280 in the second quarter to £2,074 in the third, the average consumer went back to paying the cap rate as usual, leading to an increase corresponding EPG at £3,000, a harmless technicality to most.
Ofgem has since announced that the EPC will be set at £1,923 for the final quarter of this year (or £1,949 for those on pre-payment plans).
The latest drop reflects the recent fall in wholesale energy prices – the amount energy companies pay for their electricity and gas before supplying it to households – and, although it is a significant drop Compared to the sky-high rates of the past two years, this figure still remains almost £1,000 a year above pre-pandemic levels.
As for what could happen next, analysts at Cornwall Insight predict a further slight decline likely between now and the announcement of the next EPC for the quarter beginning January 1, 2024, by which time they predict the typical annual bill will increase. will rise to £1,897.97.
The forecaster also predicts slight declines for the second and third quarters of next year before an uptick arrives in October 2024.
Despite this, the situation appears, overall, much more stable than it did a year ago, when rumblings of Russia’s war in Ukraine were first felt on global markets.
Warm Home Discount Returns
Further good news on household energy bills as colder weather sets in is the return of the government’s Warm Home Discount scheme, which was first introduced in 2011 and offers a £150 discount on household electricity and gas bills for eligible beneficiaries.
A one-off reduction automatically applied to your bill between the start of October 2023 and March 31, 2024. You are eligible for the scheme if you benefit from the guaranteed credit element of pension credit or if you have a low income and high energy costs.
You can learn more about eligibility for the Warm Home discount here.