21 April 2009
INFLATION FACING ELDERLY REMAINS
STUBBORNLY HIGH
·
Latest
figures from
·
The
gap between inflation rates facing young and old remains wide with the elderly
facing an inflation rate 70% higher than the young
·
The
elderly are beginning to benefit from reductions in gas and electricity price
inflation, but these are coming through slowly and high food price inflation continues
to hit hard
·
Inflation
rates for the under 30, 30-49 year old and 50-64 year old age groups have all fallen
compared to a year ago, but the two
oldest age groups, the 65-74 year olds and the over 75s, still face inflation rates
that are higher than last year, due to high food and utility costs
This
month’s official inflation report showed a welcome reduction in headline
inflation to 2.9%, but Alliance Trust’s ongoing monthly study of age related
inflation reveals that over 75 year olds still face an inflation rate which is much
higher than the official rate, at 4.6%. Although this age group is beginning to
benefit from the decline in gas and electricity price inflation, this is slow
to come through and the elderly currently face an inflation rate which is 59%
higher than the official headline rate and 77% higher than the inflation rate
facing 30-49 year olds.
Shona Dobbie, Head of the
|
Age Group |
Inflation Rate |
|
Under 30 |
2.7% |
|
30-49 Year Olds |
2.6% |
|
50-64 Year Olds |
2.8% |
|
65-74 Year Olds |
3.7% |
|
75 and Over |
4.6% |
Although utility price inflation
has fallen this month, gas prices have still increased by over 27% over the
last year and electricity prices by almost 18%, and these costs continue 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. Although food price inflation has declined
very slightly this month, it remains above 11%. 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 than that. Price inflation in vegetables is now almost 16% and
meat price inflation is close to 15%.
In contrast, all three of our
‘working age’ age groups continue to face 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 almost 14% and clothing prices have dropped by 10%. 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 high
prices. Gas, electricity and food prices still remain elevated and the need to
cover these basic costs leaves elderly households with much less money to spend
elsewhere. Younger age groups spend proportionately more on discretionary items,
where prices continue to fall, and so their inflation rates are lower. This
month it is the 30-49 year olds who face the lowest rate of inflation, at just
2.6%, as they are benefiting most from falling prices for clothing,
audio-visual goods and petrol.
“It
is the gap between the inflation rates facing the young and elderly which worries
us, particularly at this time when older people, who frequently rely on income
from savings, are also suffering from the impact of the recent dramatic fall in
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 |
Anjali Unnikrishnan |
|
|
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
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
on request.
4. Inflation and age chart is shown below.
Inflation and Age (January 2007 to March 2009)
Source: In-house