Inflation-linked benefits uprated by 6.7% and State Pension by 8.5%

In April 2024, Department for Work and Pensions benefits that are linked to inflation were uprated by 6.7%, in line with the annual CPI inflation rate in September 2023, according to the House of Commons Library¹. The same 6.7% uprating applied to inflation-linked tax credits elements and to benefits administered by HM Revenue and Customs¹. For 2024/25, the basic State Pension and the new State Pension were increased by 8.5%, in line with average earnings growth¹.

The two figures differ because they are set by different mechanisms. The 6.7% figure matched CPI inflation as measured in September 2023, the month used for the annual uprating of inflation-linked benefits¹. The 8.5% figure for the State Pension followed average earnings growth, the element of the triple lock that determined the 2024/25 increase¹. The Library briefing does not set out the resulting weekly or annual cash amounts for individual benefits or for the basic State Pension and new State Pension; those rates have not been reported in this document¹.

The uprating took place against a backdrop of falling inflation. The annual rate of CPI inflation peaked at 11.1% in October 2022, a 41-year high, before easing over the following 18 months, and fell to 2.0% in May 2024, the Bank of England's target, for the first time since July 2021¹. Over the three years between May 2021 and May 2024, UK consumer prices rose by 20.8% in total¹. Food and non-alcoholic drink prices were 1.7% higher in May 2024 than a year earlier, down from a peak of 19.1% in March 2023, the highest rate of food price increase since 1977; over the three years to May 2024, food prices rose by 30.6%¹.

The Library describes the wider support picture for 2024/25 as involving less cost of living support than in the previous two financial years¹. A temporary 5p cut to fuel duties was extended into 2024/25 and the planned inflation-linked increase in fuel duties was cancelled, leaving fuel duties as of July 2024 at the level they were reduced to in March 2022¹. The Household Support Fund received an extra £500 million so it could be extended until September 2024; the fund allows local authorities in England to make discretionary payments to people most in need to help with the cost of food, energy and water bills¹.

Why it matters for households

The uprating set the rates paid to people receiving inflation-linked DWP benefits, certain HMRC benefits and tax credits, and the State Pension, from April 2024 for the 2024/25 financial year¹. Because the two increases were calculated on different bases, the percentage rise received depended on which payment a household gets: 6.7% for inflation-linked benefits and tax credits, 8.5% for the basic and new State Pension¹.

The increases came as the rate of price growth was falling. CPI inflation was 2.0% in May 2024, down from the 11.1% peak in October 2022¹. The Library notes that low income households were most affected by rising prices, because they are more exposed to high food and energy costs, while the highest-income households experienced lower than average inflation¹. Over the three years to May 2024, food prices rose by 30.6% and consumer prices overall by 20.8%¹.

Other pressures on household budgets persisted into 2024. Interest rates were raised at 14 consecutive policy meetings, from 0.1% in December 2021 to 5.25% in August 2023, and were left unchanged at 5.25% at meetings up to June 2024¹. Rental price growth reached a high of 9.2% in the year ending March 2024¹. Income tax thresholds remained frozen at their April 2021 levels as of July 2024, meaning taxpayers pay more income tax on their income than if thresholds had risen with inflation¹.

What happens next

The Library briefing states that it will no longer be updated and covers the period of high inflation between the end of 2021 and mid-2024¹. It points readers to separate Library briefings for the latest inflation data and forecasts and for information on how households are dealing with the effects of high prices¹. On interest rates, financial markets as of 9 July 2024 were expecting two reductions by the end of 2024, taking rates from 5.25% to 4.75%¹. The briefing does not report the uprating percentages that will apply from April 2025¹.