Those who are reliant on their state pension could be in for a tough 2022 as inflation threatens yet more price rises.
Last month, Bank of England governor Andrew Bailey warned that he is “very uneasy” over inflation in the UK.
Speaking to MPs Mr Bailey said the decision to maintain rates was a “very close call” but stressed that he had never said the Bank would raise rates at the meeting, after the financial markets reacted poorly to the decision to hold.
He added: “As a point of guidance, in terms of emphasising the primacy of the inflation target and the link to medium-term inflation expectations, I thought it was critical that we put our foot down at that point.”
“I am concerned that there is a view in some quarters that we’ve gone off that and just sort of never admitted it. It’s not true.”
It comes after the Bank of England’s chief economist warned inflation could reach five percent next year.
Rising prices is bad news for those on the state pension, which will only rise by 3.1 percent next year after the triple lock was abandoned.
Many had hoped for an 8.3 percent rise, in line with average earnings, but the Government deemed this rise to be unfair as figures were distorted by the pandemic.
However, former pensions minister Baroness Ros Altmann told Express.co.uk this week that Prime Minister Boris Johnson’s decision will have a severe impact on those with state pension pots.
She said: “We already know that pensioners were struggling to make ends meet if they only had the state pension payments, and given the rise of prices is effecting basic goods like food and energy, they will increasingly this winter will have to choose between keeping warm and keeping fed.
“It could well cost lives.
“The fact is the Government have taken money off the poorest people in the country, and I don’t believe that is fair.
“I believe that is an absolute betrayal, I really do feel this was a very wrong decision.
“I hope the fuss we make this year will mean that this doesn’t happen again.”
The Government promised in its manifesto during the 2019 election that the triple lock would be maintained.
However, the Government has argued that its manifesto hadn’t anticipated a global pandemic and the subsequent impact on the economy.
READ MORE: State pension rates: Pensioners miss out on highest increase in decade
“So should pensioners get a higher increase than 3.1 percent this year? I think the answer is no, they need to make a fair contribution given some workers aren’t seeing an increase in their wages at the same level.
“We saw as well that NHS workers are only going to get a three percent increase on their public sector pay.”
The 3.1 percent increase will the third-highest increase to the state pension in the last decade, earning up to an extra £288 for the year.