The consumer price index (CPI) has fallen to 1.5 per cent, the lowest level since November 2016, according to the Office for National Statistics (ONS).

The ONS publication showed a 0.2 per cent drop from 1.7 to 1.5 per cent over the last month, making this the third month that the index has undershot the Monetary Policy Committee’s (MPC) 2 per cent target.

Whilst this may mean a difficult 12 months for private pension schemes, it should be good news for state pensioners who could now be in line for a 3.9 per cent increase as of next April thanks to the triple lock system.

The fall in the index has been quicker than expected, with the Bank of England (BoE) Monetary Policy Report (published last week) predicting that the slowing economy could lead to a 1.5 per cent rate by 2020.

Though this follows calls earlier this year from the Select Committee on Intergenerational Fairness and Provision to remove the triple lock, suggesting that maintaining it indefinitely was “unsustainable”.

Commenting on the reduction and subsequent impact for pensions, Aegon pensions director, Steven Cameron said: “If price inflation remains at 1.5 per cent this boosts retirees’ purchasing power by 2.4 per cent.

"However we still await an official rubber stamp, which after a cancelled budget and election purdah is taking longer than expected.”

“While falling prices are good news for consumers, especially in light of the latest wage growth figures, released yesterday, slowing from 3.8 per cent to 3.6 per cent, there are many question marks for the future with Brexit and a general election all adding to uncertainty.”

The UK’s next general election is to take place on 12 December, with many in the industry having already called on any incoming government to include aspects of the recent pension scheme bill and pension reforms within their campaign manifestos.

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