CPI inflation rose to 3% in September, according to latest figures published by the Office for National Statistics.

This latest figure is up from 2.9% in August 2017 and was last higher in March 2012.

Hargreaves Lansdown said this will have an impact on the lifetime allowance, the state pension and public sector pensions.

“The LTA will increase to £1,030,000. For those who will above the current LTA of £1,000,000 without LTAe protection, this will cut their LTA excess tax charge by up to £16,500. It could also increase their tax free cash by £7,500,” the firm stated.

“The state pension will increase from the present level of £159.55 per week (equivalent to £8,296.60 per year). The triple lock dictates it will increase in April 2018 by a rate equal to September 2017’s CPI, earnings growth or 2.5% whichever is the greatest. Given today’s CPI figure, we’re likely to see next year’s state pension increase to £164.33 a week (£8,545.50 a year).”

Head of Policy Tom McPhail said: ‘Inflation can often be bad news for pensioners and pension savers as it can erode their savings, but today’s CPI number will produce a relatively generous increase to both private pension savings and to the state pension.

Economist at Royal London Asset Management Ian Kernohan said 3% inflation will not “come as a surprise to the Bank of England”.

“CPI inflation rose to 3.0% in September, on the cusp of letter writing territory,” he said.

“ While this is higher than expected in the August Inflation Report, the Bank of England’s MPC did signal in the last set of minutes that CPI would rise to 3% by October, so this won’t have come as a surprise to them.

“We expect the MPC to raise interest rates at the next meeting in November. Inflation should fall back next year, as the effect of sterling devaluation begins to ease.”

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