BRITAIN’S dip in inflation means that next year’s benefits rise will “barely touch the sides,” analysts warned today.

The Resolution Foundation think tank cautioned that September’s fall in inflation is “badly timed,” with it being used to set how much benefits are uprated next year and therefore resulting in a lower increase.

CPI inflation fell to 1.7 per cent last month, down from 2.2 per cent in August, driven by a sharp fall in transport prices.

But the foundation warned that the fall is not expected to last and forecasted that rises in energy prices will likely mean that inflation will increase by 0.5 per cent next month.

This indicates that the benefits increase next April is vulnerable to being eroded by rising bills.

The Resolution Foundation highlighted that if benefits were uprated in line with October’s inflation figure, which is projected at 2.2 per cent, a typical low-income family with two children would see their universal credit benefits rise by £327 annually.

This is instead of the £253 that it would be if aligned with last month’s CPI.

According to the Joseph Rowntree Foundation, a 1.7 per cent increase in benefits would mean that the standard allowance basic rate of universal credit would rise by around £1.50 a week from its current level of £90.55.

Iain Porter, a senior policy adviser at the charity, said: “The consequence of today’s rate of inflation is that April’s uprating will be worth just a few pounds to most people.

“The reality is millions of families can’t afford enough food this week, or to turn the heating on as the nights get colder — emphasised by the fact that food price inflation has risen for the first time since early last year.”

He added: “The basic rate of universal credit is so insufficient it fails to protect families from hardship, and this increase will barely touch the sides.”

September marks the first time that inflation has fallen below the Bank of England’s target of 2 per cent since April 2021.