Inflation rates fall but disparity remains between age groups

This month's official inflation report showed that the headline rate of inflation fell from 3.7% to 3.4% in May, reversing the move in the previous month. Alliance Trust’s monthly study of inflation rates facing different age groups reveals that, while all ages have benefited from a decrease in inflation over the month, there are still big differences in the rates of inflation facing different age groups. For example, for the eighth consecutive month, the 50-64 year olds face the highest rate of inflation, at 4.6%, while the over 75s face the lowest rate, at 3.3%.

The 50-64 year old age group is facing a rate of inflation which is 35% higher than the official rate, largely due to the fact that this group spends relatively more of their disposable income on transport; where inflation remains relatively high, at more than 10%. Furthermore, fuel price inflation remains particularly high, at almost 23%. In contrast, the over 75s continue to face the lowest rate of inflation, at 3.3%, helped by the fact that this group spends relatively more of their budget on food, where inflation has fallen sharply this month, and utilities, where prices are still lower than at this time last year.

Shona Dobbie, Head of the Alliance Trust Research Centre, said, "Inflationary trends have eased this month, helped by less upward pressure on fuel prices but, in particular, by a decline in food prices. In addition, we continue to benefit from ongoing price deflation in both clothing and audio-visual goods.

The decrease in food price inflation has the biggest impact on the two oldest age groups as these households spend a larger proportion of their budgets on food. As a result, these two age groups currently face the lowest rates of inflation. At the other end of the scale, it is the two working age groups who currently face the highest rates of inflation, largely due to the fact that transport price inflation remains higher than 10%."

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Ongoing inflation rise continues to hit working age groups hardest while elderly see a respite

This month’s official inflation report showed that the headline rate of inflation increased from 3.4% to 3.7% in April. Alliance Trust’s monthly study of inflation rates facing different age groups reveals that, while all ages suffered a rise in inflation over the month, there are still big differences in the rates of inflation being faced across different age groups. For the seventh consecutive month, the 50-64 year olds face the highest rate of inflation, at 5.0%, while the over 75s face the lowest rate, at 3.6%.

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