According to Saga, this high inflation figure, coupled with the latest announcement from the Bank of England to extend Quantitative Easing by a further £50bn, is another bitter blow for pensioners. “QE was originally supposed to be a policy to fight “deflation”, yet in reality, it has turned out to be a policy that has created high inflation and whittled away older people’s purchasing power, while at the same time reducing the value of their pensions,” says Dr Altmann.
Saga’s monthly Price Indices*, compiled by research house Cebr, show that inflation on both the RPI and CPI measures remain higher for over 50s compared with the UK as a whole.
Even more worrying, the Saga Price Indices show, that since the September 2007 failure of Northern Rock, the over 50s have experienced a cumulative inflation rate of over 20%. The cost of living has risen for different age bands as follows:
On RPI measure since September 07:
• 50-64: 18.9%
• 65-74: 20.5%
• 75 and over: 20.8%
• Whole population (RPI): 14.4%
One factor keeping inflation elevated for the over 50s is the sharp rise in utility prices over the past year. Gas prices in January 2012 were 18.7% higher than a year ago, while electricity prices were 13.2% higher.
Commenting on the latest Saga Price Indices, Ros Altmann said: “Yes, we welcome the fall in the annual cost of living, but these inflation figures are still dreadfully high. This is why more QE seems like a panic measure. It’s a massive risk which will make pensioners permanently poorer.
“High prices are damaging for consumer demand and are resulting in more pensioners pushed into poverty. This will weaken the economy and damage job creation for the young and unemployed.
NOTES FOR EDITORS:
*Saga created its own Saga Price Indices, with respected research house, Cebr, to explore how inflation is affecting the over 50s because price rises can be felt differently due to different spending patterns across age groups:
RPI for January:
75 and over: 4.9%
Whole population: 3.9%
CPI for January:
75 and over: 3.9%
Whole population: 3.6%