24 March 2009
ELDERLY STILL FACE INFLATION OF CLOSE
TO 5%
- Latest figures from
- The
gap between inflation rates facing young and old remains wide with the
elderly facing an inflation rate 75% higher than the young
- The
elderly have benefitted from recent reductions in gas and electricity
price inflation, but rising food price inflation continues to hit hard
- The
under 30s, 30-49 year olds and 50-64 year old age groups all face
inflation rates which are lower than the official rate of 3.2%, but it is
the two oldest age groups, the 65-74 year olds and the over 75s, who are
benefitting least from current discounting and the recent cut in VAT
This
month’s official inflation report showed a surprise increase in headline
inflation to 3.2%, but Alliance Trust’s ongoing monthly study of age related
inflation reveals that over 75 year olds
face an inflation rate which is much higher than the official rate, at 4.9%. This age group has benefitted from the decline in
gas and electricity price inflation, but still faces an inflation rate which is
53% higher than the official headline rate and 75% higher than the inflation
rates facing both the under 30s and 30-49 year olds.
Shona Dobbie, Head of the
|
Age Group |
Inflation Rate |
|
Under 30 |
2.8% |
|
30-49 Year Olds |
2.8% |
|
50-64 Year Olds |
3.0% |
|
65-74 Year Olds |
3.9% |
|
75 and Over |
4.9% |
Although utility price inflation
has fallen this month, gas prices have still increased by over 33% over the
last year and electricity prices by 18%, and
this continues to hit over 75 year olds the hardest. This age group spends more
than 7% of their budget on electricity and gas bills whereas the under 30s
households spend just over 3% on these services.
Over 75 year olds also suffer relatively
more whenever food prices are high and food price inflation has increased even
further this month, to just under 13%. This
hits the over 75 year old age group most acutely as they allocate more than 16%
of their household budget to food compared to just 9% for under 30s. Inflation
for many basic food items is even higher. During January, price inflation in
vegetables reached almost 19%, meat price inflation now stands at over 15% and even
bread and cereal prices have risen by more than 11% over the last year.
In contrast, all three of our
‘working age’ age groups are now facing inflation rates which are lower than
the official rate of inflation. These younger age groups are benefitting 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 sharply. Over the last year, the prices of audio-visual goods have
fallen by more than 14% and clothing prices have dropped by 11%. The under 30s spend almost 6% of their budget on
clothing and footwear compared to 4% allocated by the over 75 year olds.
Spending
Weights
|
Age Group |
Food |
Electricity |
Gas |
Petrol |
|
Under 30 |
9.0% |
1.8% |
1.5% |
4.3% |
|
30-49 Year Olds |
10.9% |
2.0% |
1.8% |
5.0% |
|
50-64 Year Olds |
11.6% |
2.2% |
2.0% |
5.2% |
|
65-74 Year Olds |
14.4% |
2.7% |
2.5% |
4.6% |
|
75 and Over |
16.4% |
3.7% |
3.5% |
3.2% |
Note:
This table shows the spending patterns of different age groups across different
spending categories.
Shona Dobbie added, “The elderly continue to be hit hardest by
rising prices for essential goods and services which account for a large
proportion of their spending. The need to pay elevated gas, electricity and
food prices leaves elderly households with much less money to spend elsewhere.”
“Younger
age groups spend proportionately more on discretionary items, where prices continue
to fall. It is the resulting gap between the inflation rates facing the young
and elderly which is of great concern to us at a time when older people, who frequently
rely on income from savings, are clearly also suffering from the impact of
falling interest rates.”
You can obtain a copy
of the report by emailing contact@alliancetrust.co.uk or phoning
08000 326323.
|
Contacts |
|
|
|
|
|
Jane Holligan, Communications Manager |
|
|
|
Finsbury
Group |
|
Tel: +44 (0)1382
306 064 |
Tel: +44 (0)20
7251 3801 |
|
Email: alliancetrust@finsbury.com |
|
|
Web:
www.alliancetrust.co.uk |
Web:
www.finsbury.com |
Notes to editors
- Alliance Trust PLC is a self-managed investment
company with investment trust status. A FTSE-100 company, it is the
largest generalist
- 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.
- Photographs
of Shona Dobbie are available on request.
- Inflation
and age chart is shown below.
Inflation and Age (January 2007 to February 2009)
Source: In-house