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Working age groups face rate of inflation of more than 4%

This month’s official inflation report showed that the headline rate of inflation rose from 1.9% to 2.9% in December. Alliance Trust’s monthly study of inflation rates facing different age groups reveals that each group continues to face a rate of inflation considerably higher than the official rate, and that these have increased even further this month. The 50-64 year old age group now face the highest rate of inflation, at 4.1%, followed very closely by the 30-49 year old age group, whose current inflation rate is 4.0%. The 50-64 year old group is facing a rate of inflation which is 41% higher than the official rate, due largely to the fact that this group spends relatively more on transport, where inflation is currently high, at almost 9%. In particular, fuel price inflation is currently running at more than 18%. For the third consecutive month, the over 75s are facing the lowest rate of inflation, at 3.3%, helped by the fact that this group spends relatively more on food and utilities, where inflationary pressures remain contained.

Shona Dobbie, Head of the Alliance Trust R esearch Centre, said, "As expected, inflationary trends have increased sharply this month, reflecting the anniversary of the VAT cut in December 2008, higher fuel costs and the fact that the recent depreciation of sterling is pushing up the cost of imported goods. These price moves are currently having the greatest impact on the two working age groups, who spend a larger proportion of their budgets on the goods and services which are seeing high price increases. The fact that the working age groups now face an inflation rate of more than 4%, but average earnings have grown by only 1.5% over the last year, highlights the sharp erosion of purchasing power which is taking place at this time."

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Working age groups face rate of inflation of more than 4%

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Over 75s now face the lowest rate of inflation, for the first time in almost two years

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