13 May 2008

LATEST FIGURES SHOW INFLATION RATE FACING THE ELDERLY HAS SURGED TO 4.1%

·         Inflation rate facing the over 75 year olds now 37% higher than the official rate of inflation.

·         Under 30s age group faced the lowest level of inflation in April at 3.0%, similar to the official headline rate.

·         Food prices have risen by more than 7% over the last year, electricity prices have jumped by more than 8%, and petrol prices are up almost 19%.

·         Alliance Trust Research Centre warns that inflation could rise even further over the next few months, reflecting further pressure on prices for both food and fuel.

 

Alliance Trust’s independent study of age related inflation has found that inflation surged in April and hit the over 75 year olds the hardest – this age group now faces an inflation rate of 4.1%.  Inflation rates facing all other identified age groups have also increased and the majority are running ahead of the official headline rate of inflation of 3.0%.

 

Age Group

Inflation Rate

Under 30

3.0%

30-49 Year Olds

3.3%

50-64 Year Olds

3.6%

65-74 Year Olds

3.8%

75 and Over

4.1%

 

 

Food price inflation has increased by more than 7% over the last year, utility prices have increased by over 8% and petrol prices have risen by 19% in the same period. These price increases have a major impact on the inflation rate facing the elderly as a significant proportion of their household income is spent on these items. In contrast, younger generations tend to spend a higher proportion of their incomes on clothing, footwear and audio-visual goods, where prices continue to fall, helping them to escape the worst of the current inflationary pressures. 

 

These findings confirm that the elevated level of inflation facing the older age groups remains in place, and is worsening, driven by recent price increases for food and fuel. Alliance Trust Research Centre predicts that inflationary pressures will remain strong in the coming months for basic goods and services.

 

Shona Dobbie, Head of the Alliance Trust Research Centre said, "Our study highlights the extent to which inflationary pressures are hitting the elderly hardest. Once again, we have found that the over 75s are the most exposed to the negative impact of high food and energy costs. Food prices are now rising at a general rate of 7%, but in the case of some food groups, such as dairy products, inflation is running as high as 16%. This affects the elderly in particular, as these households spend a higher proportion of their budgets on basic food items.

 

“We still face the problem that it is the prices of basic goods and services which are displaying the highest inflationary pressure. When everyday items are going up in price, the impact on our wallets is highly visible to us all. The official headline rate of inflation rose considerably this month, but in the case of food and energy the situation is even worse, and this leaves us with less money to spend on the items where prices continue to fall. Unfortunately, we see little respite from this situation over the next couple of months as the oil price is expected to remain high and there are global shortages of some foodstuffs. Headline inflation is likely to rise a bit further in the short term. ”

 

Alliance Trust’s full latest report on ‘Inflation and Age’ is available on www.alliancetrust.co.uk

You can obtain a copy of the report by emailing contact@alliancetrust.co.uk or phoning 08000 326323.

 

 

Contacts

Jane Holligan, Media Relations Manager          Anna Schirmer/ Stuart Lerman/ Anna Moulds

Alliance Trust                                                   Lansons Communications

Tel  +44 (0)1382 306064                                   Tel  +44 (0)20 7490 8828

Mobile  07745 783212                                      Email  alliancetrust@lansons.com

Email  jane.holligan@alliancetrust.co.uk

Web  www.alliancetrust.co.uk  

 

 

Notes to editors

1.       Alliance Trust is an international investment and financial services group. It is headed by Alliance Trust PLC, a FTSE 100 company and 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.

 

4.       Inflation and Age chart illustrated below.

 

 

 

 

 

 

 

 

 

 

 

 

Inflation and Age (Jan 2006 to April 2008)