Rishi Sunak expects inflation to rise even further this year as the cost of living crisis in the UK deepens.
Earlier today, the Chancellor announced a string of financial packages in a bid to help the most vulnerable people in the UK as the cost of essential items continues to soar.
Mr Sunak was probed on the measures announced in the House of Commons during a Q&A with Money Saving Expert Martin Lewis on Thursday evening.
The Tory minister revealed that the Government is anticipating the inflation rate to be ‘relatively high’ in September.
He added that pensions and benefits are likely to rise “significantly higher” than that inflation rate next year.
When asked if he may have to provide further support next year on the cost of living, Mr Sunak said: “None of us know what energy prices are going to be next year, but what I can tell you now and what people should be reassured by is that the way our system works, benefits and pensions next year are likely, subject to a review that has to happen legally, to go up by quite a significant amount because the inflation rate that decides that is set in September.
“That is likely to be a relatively high inflation rate in September, so that is what will happen next year for everyone’s benefits and pensions, and that increase is most likely to be significantly higher than the inflation we will see next year on all forecasts that are currently available.
“So that should give people an enormous sense of reassurance that we are providing the help today to help them get through to that point and that actually next year there is going to be an enormous easing as all their incomes go up considerably compared to what the increase in prices is.”
As part of the announcements made by the Chancellor today, low income households will receive a new one-off £650 cost of living payment.
A more widely targeted £400 discount grant on energy bills will also be issued in October this year.
Pensions will benefit from an extra winter fuel payment of £300 while disabled benefit claimants will receive a one-off payment of £150.
Sunak announced a 25 per cent windfall tax on North Sea oil and gas companies to help pay for the £15 billion support package.
The “temporary Energy Profits Levy” on oil and gas firms will raise around £5 billion, with a new investment allowance to encourage firms to invest in oil and gas extraction in the UK.
During his chat with Martin Lewis, Mr Sunak denied that the support package had been timed to deflect from the publication of the Sue Gray report into lockdown parties at Number 10.
The Chancellor claimed that he was forced to take action after the energy regulator Ofgem said that it expects the energy price cap to rise to around £2,800 in October.
Mr Sunak said: “I can categorically assure you that that had no bearing on the timing for us announcing this support, and I can give you my absolute assurance on that and my word.
“The reason we acted today was because we had more certainty about what will happen to energy prices in the autumn.”
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