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UK will increase state pensions and benefits in line with inflation

A person reads a newspaper outside the Bank of England in the City of London financial district in London

LONDON (Reuters) - British finance minister Jeremy Hunt said on Thursday he would raise state retirement and welfare benefits payments in line with inflation.

Hunt said he would raise benefit payments by 10.1%, which would cost about 11 billion pounds ($12.99 billion).

The government was also committed to the 'triple lock', a government promise to raise publicly-funded pensions by whichever is higher of average earnings growth, consumer price inflation or 2.5%, he said.

"In April, the state pension will increase in line with inflation," Hunt told parliament as he made a speech on his tax and spending plans. "To the millions of pensioners who will benefit from this measure I say, now and always, this government is on your side."

($1 = 0.8470 pounds)

(Reporting by Andrew MacAskill; editing by Michael Holden)