No progress for elderly as inflation decline stallsThis month’s official inflation report showed that the headline rate of inflation remained constant at 1.8%. Alliance Trust’s monthly study of age-related inflation rates reveals that this is the rate of inflation facing working age groups, but that retired households face greater price pressures. The 65-74 year olds face an inflation rate of 2.3%, which is 28% higher than the official rate, whilst the over 75 year olds face an inflation rate of 2.8%, 56% higher than the official rate. This is because retired households typically spend a higher proportion of their budgets on basic goods and services, such as utilities and food; where price inflation remains relatively high.
Shona Dobbie, Head of the Alliance Trust Research Centre, said, "It is disappointing to see that inflationary pressures facing the elderly have not receded this month. Recent declines in overall inflation have stalled and the inflation rates facing the two retirement age groups remain persistently higher than for any of the other age groups. The 65-74 year olds face a rate of inflation of 2.3%, and the over 75 year olds face a rate of inflation of 2.8%, both of which are significantly higher than the official rate of inflation of 1.8%. The benefits of falling prices are still coming through more slowly for the elderly, who spend a larger share of their budgets on basic goods and services."
Utility price inflation remains relatively high, at almost 10%. Electricity price inflation is below 7%, but gas price inflation remains much higher, at almost 23%. These basic price pressures hit the over-75 year olds the hardest, as this age group spends more than 7% of their budget on electricity and gas bills; whereas the under 30 year olds spend just over 3% on these services.
Over 75 year olds also suffer when food prices are high. Although food price inflation has declined again this month, this remains above 4%, much higher than the overall rate of inflation. This trend again hits the over 75s most acutely, as they allocate more than 16% of their household budget to food, compared to just 9% for the under-30s.
This month, the under 30s and the 30-49 year old age groups saw a rise in their inflation rates, to 1.8% in both cases. These younger age groups have been hit this month by a 0.9% increase in rents, a 3% rise in second hand car prices and a 4.6% rise in transport service prices. These effects outweighed the ongoing benefit from the fact that price inflation in audio-visual goods, clothing and footwear continues to fall sharply. Over the last year, the prices of audio-visual goods have fallen by more than 10%; clothing prices have dropped by almost 10%; and footwear prices by more than 5%. The under-30s spend almost 6% of their budget on clothing and footwear, compared to the 4% allocated by the over 75 year olds.
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