17 July 2007
COST
OF LIVING RISING NEARLY A THIRD FASTER FOR
The Alliance Trust Research
Centre's monthly 'Age and Inflation' alert shows the rate of inflation facing
the over-75s has declined over the month, from 3.4% to 3.1%, but remains higher
than the inflation rates facing other age groups. Households headed by someone
aged over 75 have consistently faced inflation of more than 3% since May 2006.
Despite the official rate of headline inflation falling back to 2.4% in June,
Alliance Trust’s monthly inflation alert shows that the inflation rate facing the over-75s is still 29% higher.
The headline findings, based on
the updated spending patterns of different age groups and analysis of official
June inflation figures are:
·
The
inflation rates facing all age groups have declined for a third consecutive month
as gas and electricity prices fell sharply. Gas prices fell almost 3% over the
month and electricity prices declined by over 1%
·
Inflation
for the over 75s remains high at 3.1%, that's 29% higher than headline
inflation of 2.4%
·
The
youngest age group continue
to face the second highest rate of inflation as they still face the burden of
higher rents and education costs
·
Inflation and Age (Jan 2004 to
June 2007)
Alliance Trust's age-related inflation study
has been updated using official price data for June. Our results show that the
rate of inflation facing every identified age group continued to decline, as
electricity and gas prices decreased. However, the impact of inflation
continues to differ for different age groups. The rate of inflation facing the
over 75s remains the highest, at 3.1%, as they allocate a high proportion of
spending on basic necessities. Energy price cuts are now being passed through
to consumers, with gas price inflation running at 5% and electricity price
inflation at 6%. Over the month, this contributed to the lower inflation rates
faced by every age group. Elderly households have been facing a rate of
inflation in excess of 3% since May 2006, missing out on lower prices for
clothing and audio-visual products.
The under 30s still have the second highest
rate of inflation, despite falling from 2.8% to 2.7%. Young people spend a
large proportion of their budgets on basic goods and services, such as gas,
electricity and food, which although eased over the month still remain high. In
addition, they face the burden of higher rents and education costs, which have
increased by 14% over the last year.
Shona Dobbie, Head of the Alliance Trust Research Centre said, "Our four-year study continues to highlight
the extent to which the
"The impact of higher prices for
basic goods and services, such as heating and food, almost always falls most
heavily on the elderly and those on low incomes, as these households spend a
larger proportion of their budgets on these necessities. In recent years, low
income and elderly households have been forced to allocate a large part of
their budgets to the goods and services which have experienced the highest
price changes, leaving little disposable income left over to spend on
discretionary goods, such as clothing, footwear and audio visual products,
where prices have declined over the last 12 months."
You can obtain a copy of the report by
emailing contact@alliancetrust.co.uk
or phoning 08000 326323.
Notes to editors
1. Alliance
Trust is an international investment and financial services group. It is headed
by Alliance Trust PLC, the largest generalist investment trust company listed
on the London Stock Exchange. Through its subsidiaries, Alliance Trust offers
investment dealing, self-invested personal pensions and a choice of investment
wrappers.
2. The
Research Centre is part of Alliance Trust and was formed to carry out economic and social analysis to deepen our understanding of economies,
markets and socio-economic issues.
3. Photographs of Shona Dobbie are available.