DWP benefits may be 'cut' thanks to inflation 'good news'

The UK’s latest inflation rate, announced by the ONS as 1.7%, was celebrated as a major success for the British economy, achieving the seemingly ambitious Bank of England target of sub-2% rates for 2024. However, the surprise drop has arguably the worst possible timing for benefits claimants.

Benefit amounts are increased every April by the cost of living figures from the previous September. The fact that this monumental drop happened in September could see some recipients getting only a few quid more over the entire 2025/2026 tax year. This is despite predictions that the inflation rate will skyrocket back up to 2.



2% as soon as the end of October, with the energy price cap leading the way with a 10% rise on October 1st. Resolution Foundation warned that the average low-income family-of-four on Universal Credit would only get an extra £253 for the 2025/2026 tax year but suggested using the predicted 2.2% instead would give them a more sizeable £327.

Lalitha Try, an economist at the think tank, warned as the state pension is due to rise by 4.1% in line with wage growth: “This temporary fall is badly timed for millions of families as it will result in a lower increase in their benefits next year. The government needs to address the age divide in benefits which has left working-age support fall further behind rising wages and living standards.

” The Joseph Rowntree Foundation estimates that Universal Credit already falls short by around £120 a month for families needing the essentials. Iain Porter, senior policy adviser at the charity warned The Big Issue : “This increase will barely touch the sides. The budget must contain urgent measures to support families who are going without essentials.

” Additionally, the inflation drop could also spell trouble for savers as the Bank of England is now expected to cut interest rates for a second consecutive time to 4.75% after being stationary at 5.25% since August last year.

Although borrowers on variable rates will see their bills lowered, savers likely won’t be reaping the benefits and are usually impacted by Bank of England changes before borrowers..