The benefits freeze will end in April, the government has confirmed in what Labour said was a “cynically timed announcement”.

Universal credit will rise by 1.7%, in line with inflation, and the state pension will increase by 3.9%, the Department for Work and Pensions said on Sunday.

It said the end to the freeze, which was introduced by the Tory former chancellor George Osborne, would cost £5bn a year.

The shadow work and pensions secretary, Margaret Greenwood, said: “Nobody will be fooled by this cynically timed announcement, which even now will leave the benefits freeze in place until next April. Harsh, punitive Conservative policies like the benefits freeze, the two-child limit and the five-week wait have created a society where people are being forced to turn to food banks in ever-increasing numbers just to survive.

“Labour will abolish the benefits freeze, scrap universal credit and put an end to the two-child limit. We will ensure that our social security system genuinely protects people from poverty as it should.”

The work and pensions secretary, Thérèse Coffey, said: “We’re clear the best way for people to improve their lives is through work, but we know some people require additional support.

“Our balanced fiscal approach has built a strong economy, with 3.6 million more people in work since 2010. And it’s that strong economy which allows us to bolster the welfare safety net by increasing benefit payments for working-age claimants now.”

The Resolution Foundation thinktank said the announcement was a missed opportunity. Its senior economic analyst Adam Corlett said: “The benefit freeze was always due to end next year. The government’s confirmation that working-age benefits will only keep pace with rising prices means there will be no increase in living standards, and those in need of extra support will continue to be left behind.

“With child poverty at risk of hitting record highs, this is a missed opportunity to provide a much-needed boost for low- to middle-income families.”