16 December 2008
DESPITE DROP IN AVERAGE
INFLATION, ELDERLY STILL FACE RATE OF 6.7%
·
Latest
figures show inflation rate facing over 75 year olds was 6.7% in November, 63%
higher than the official rate of inflation of 4.1%
·
Decline
in the rate of inflation facing the elderly was the smallest among all five age
groups as gap widens between inflation rate for young and old
·
Higher
gas and electricity prices and accelerating food prices continue to hit the
elderly the hardest as we enter the winter months
·
Both
the under 30s and the 30-49 year age groups continue to face inflation rates
which are lower than the official rate of 4.1%
As
latest figures show a drop in average inflation, Alliance Trust’s ongoing
monthly study of age related inflation has found that the over 75 year olds
continue to face an inflation rate that far exceeds the official rate. Despite
headline inflation falling to 4.1% in November, this age group only saw their
inflation rate decline from 7.1% to 6.7%. This was the smallest decline among
all five age groups and leaves the elderly facing a rate of inflation which is
63% higher than the headline rate of 4.1%, which was down from 4.5% the
previous month.
|
Age Group |
Inflation Rate |
|
Under 30 |
3.7% |
|
30-49 Year Olds |
3.7% |
|
50-64 Year Olds |
4.3% |
|
65-74 Year Olds |
5.2% |
|
75 and Over |
6.7% |
Gas prices increased more than
50% over the last year and electricity prices rose by more than 30%, hitting
the over 75 year olds the hardest. This age group spends almost 7% of their
budget on electricity and gas bills whereas the under 30 households spend just
3% on such utilities.
Over 75 year olds also suffer when
food prices are high. Food price inflation accelerated in November and prices
are almost 12% higher than a year ago. This hits the over 75 year old age group
the most acutely as they allocate 16% of their household budget to food
compared to less than 9% for the under 30 households. Inflation for many basic
food items is even higher than this. In November, fruit and vegetable prices in
particular rose strongly. Fruit prices increased almost 11% from a year ago and
vegetable prices rose 14%.
The under 30s and 30- 49 year
olds continue to face an inflation rate that is lower than the official rate of
inflation. Younger generations benefit from the fact that they spend a higher
proportion of their incomes on discretionary items, such as audio visual goods,
clothing and footwear, where prices continue to fall. Over the last year, the
prices of audio-visual goods have fallen by almost 14% and clothing prices have
dropped by almost 8%, reflecting heavy discounting by the major retailers. The
under 30s spend 6% of their budget on clothing, which is almost double the
amount allocated by the over 75 year olds. The inflation rate facing these two
age groups is 3.7% and is almost 10% lower than the official rate of inflation
of 4.1%.
Spending
Weights
|
Age Group |
Food |
Electricity |
Gas |
Petrol |
|
Under 30 |
8.5% |
1.6% |
1.4% |
4.2% |
|
30-49 Year Olds |
10.6% |
1.8% |
1.6% |
5.1% |
|
50-64 Year Olds |
11.6% |
2.0% |
1.9% |
5.1% |
|
65-74 Year Olds |
13.8% |
2.5% |
2.5% |
4.5% |
|
75 and Over |
16.3% |
3.4% |
3.5% |
2.5% |
Note:
This table shows the spending patterns of different age groups across different
spending categories.
Shona Dobbie, Head of the Alliance Trust Research Centre said, "It is encouraging to see headline
inflation fall back again this month, however, we remain concerned about the
high level of inflation which the older age groups still face. The rate of inflation facing the over
75s has been reduced, but only to 6.7 %, which is still 63% higher than the
official rate of inflation. This highlights the
extent to which the elderly are suffering disproportionately as they spend a
higher proportion of their budget on utility costs which have soared over the
past year. This
high level of inflation is worrying for elderly consumers especially now that we
have entered the winter months as high gas, electricity and food prices leave
elderly households with less money to spend elsewhere.”
“Younger
generations are benefiting from falling audio visual and clothing prices, which
are pulling their inflation rates down. Huge sales by retailers mean that the
younger age groups are likely to keep benefiting from such price cuts. This
could cause the gap between inflation rates facing the young and elderly to
widen.”
You can obtain a copy
of the report by emailing contact@alliancetrust.co.uk or phoning
08000 326323.
Contacts
Jane Holligan, Media Relations Manager Alliance
Trust Lansons
Communications Tel +44
(0)1382 306064 Tel +44 (0)20 7490 8828 Email jane.holligan@alliancetrust.co.uk Email alliancetrust@lansons.com Web www.alliancetrust.co.uk |
Notes to editors
1.
Alliance Trust PLC is a self-managed investment
company with investment trust status. A FTSE-100 company, it is the largest
generalist
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 is shown below.
Inflation and Age (January 2006 to November 2008)
Source: In-house