Overview
- Britain’s fiscal watchdog cautions that inflation could exceed 3% this year if oil and gas prices remain elevated due to the Iran-related conflict.
- Millions are set to receive a 4.8% rise in April, taking the full state pension to £12,547.60 a year.
- Under the policy, annual increases are set by the highest of inflation, average earnings, or 2.5%, using September inflation and May–July wage data.
- That timing can carry a one-off price surge into the following year via stronger wage growth, a pattern seen after the 2022 Ukraine shock with a 10.1% uplift in 2023 followed by 8.4% in 2024.
- Analysts including Ezra Cohen and Adam Cole say pensioners could benefit from larger awards while warning the mechanism is volatile and adds pressure to public finances.