The increase is mainly due to higher energy costs, and it is thought that with prices of energy now falling back, inflation has probably now reached its peak. Once the energy price reduction feed through in the next few months the index should start to go back towards target.
The Retail Price Index (RPI) is currently running at 5% up from 4.9% in August, and it will be this figure that is used to calculate the increase in pensions. So we have one group that will be happy as they should get sharply rising pensions at a time of falling inflation. However it will of course not bring pensions back to previous levels in real terms.
