13 October 2009
Young
face highest rate of inflation for first time in six years
- Latest figures
from
·
For the first time
in our six-year study, the youngest age group is facing the highest rate of
inflation, at 1.5%. This is due to a combination of factors, including the
higher costs of clothing, eating out and second hand cars.
·
Our three working age groups all face a similar rate of
inflation, of 1.4%, helped by the decline in fuel prices, which have dropped
6.6% over the year.
·
During the month, food
prices also fell, by 0.9%, while gas and electricity prices remained unchanged.
However, clothing prices rose 4.0% over the month and education costs increased
by 1.8%, both of which impact the youngest age group.
This month’s official inflation report
showed that the headline rate of inflation fell from 1.6% to 1.1% in September.
Alliance Trust’s monthly study of inflation rates facing different age groups reveals
that each group faces a rate of inflation higher than the official rate, but
that these have fallen sharply this month. In addition, retired households no
longer face the greatest price pressures. For the first time in the history of
our study, it is the youngest age group which is facing the highest rate of
inflation, at 1.5%. This is 36% higher than the official rate, and 7% higher
than the inflation rate being faced by the over 75s. The
sharp decline in the inflation rate facing the elderly is due to falling prices
for both utilities and food.
Shona Dobbie, Head of the
Furthermore, our
study shows that the highest inflationary
pressures currently face the youngest age group. This is due to a combination
of factors including increased prices for clothing, education fees and even
second hand cars. The nature of price pressures has therefore altered
significantly this month, greatly impacting the different age groups.”
|
Age Group |
Inflation Rate |
|
Under 30 |
1.5% |
|
30-49 Year Olds |
1.4% |
|
50-64 Year Olds |
1.4% |
|
65-74 Year Olds |
1.4% |
|
75 and Over |
1.4% |
Utility price inflation dropped sharply
this month to -7.3%, as electricity price inflation eased, to -7.2%, while gas price inflation reached
-5.6%. The negative rate of inflation in both these categories has helped the over
75 year olds in particular, and is one of the key reasons their inflation rate
has dropped so sharply this month. The elderly spend more than 7% of their
budget on electricity and gas bills; whereas the under
30 year olds spend just over 3% on these services.
In addition, the elderly have also been
helped by the drop in food prices this month and inflation in this category has
fallen to just 1.1%, in line with the official headline rate of inflation. Over-75
year old households allocate more than 16% of their household budget to food,
compared to just 9% for the under 30s.
Spending
Weights
|
Age Group |
Food |
Electricity |
Gas |
Petrol |
Clothing/ Footwear |
|
Under 30 |
9.0% |
1.8% |
1.5% |
4.3% |
5.9% |
|
30-49 Year Olds |
10.9% |
2.0% |
1.8% |
5.0% |
6.3% |
|
50-64 Year Olds |
11.6% |
2.2% |
2.0% |
5.2% |
5.7% |
|
65-74 Year Olds |
14.4% |
2.7% |
2.5% |
4.6% |
4.7% |
|
75 and Over |
16.4% |
3.7% |
3.5% |
3.2% |
3.9% |
Note: This table shows the spending
patterns of different age groups across different spending categories
You can obtain a copy
of the report by emailing contact@alliancetrust.co.uk or phoning
08000 326323.
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Jane Holligan, Communications Manager |
Clare Dundas/ |
|
|
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
- Photographs of Shona Dobbie are available on request.
- Inflation and age chart is shown below.
Inflation and Age (January 2007 to September 2009)
Source: In-house