“Living costs have risen somewhat less fast in December but today’s inflation figures are nothing to celebrate’’ says Dr Ros Altmann, Director General of over-50s specialists Saga. ‘’Inflation remains over double the Government’s 2% target and older people are suffering worse than anyone. Over 50’s inflation is still around 5.5% (RPI), well above the nation’s average (4.8%).
Some commentators may focus on the fact that there has been a welcome fall in the annual cost of living, but these inflation figures are still dreadful, especially for older generations. Saga’s monthly Price Index, compiled by research house Cebr reveals 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: 19.6%
- 65-74: 21.0%
- 75 and over: 21.3%
- Whole population: 15.1%
In particular, pensioners spend significantly more on energy than younger age groups (see Chart 3) and our figures reveal the shocking fact that gas prices have risen by 67.2% and electricity prices by 38.6%, since the start of the ‘credit crisis’. In the past year alone, electricity costs have increased by 14.1% and gas prices have soared by 19.8%.
Energy prices still sky high
Energy prices are still much higher than a year ago and remain a significant pressure on the cost of living for the over-65s. In December, electricity prices were 14.1% higher than the same month a year ago, while gas prices were 19.8% higher. Since September 2007, electricity prices have risen by 38.6%, while gas prices have risen by 67.2%.
Older age groups spend proportionately more on electricity, gas and other fuels, compared with younger age groups. For over-75 households, expenditure on electricity, gas and other fuels accounts for 8.5% of total spending, more than double the 3.5% seen for under-30s households.
Commenting on the latest Saga Price Indices Ros Altmann said: “These figures show just how damaging inflation is for older people. With energy still taking up a large proportion of pensioner’s spending, it is imperative that prices continue to drop and that people shop around for the best deals they can.
“High levels of inflation are damaging consumer demand and pushing more pensioners 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* to explore how inflation is affecting the over 50s because price rises can be felt differently due to different spending patterns across age groups. The latest numbers show that inflation on both the RPI and CPI measures is significantly higher for over 50s compared with the UK as a whole. Annual consumer price index (CPI) inflation in December was 4.2%, down from 4.8% in November, but for older age groups, the figures are as follows.
CPI for November:
50-64: 4.3% (4.8% in November)
65-74: 4.1% (4.6% in November)
75 and over: 4.4% (4.9% in November)
RPI Annual retail price index (RPI) inflation was 4.8% in December, down from 5.2% in November. Saga calculated that annual retail price index (RPI) for the over 50s in December was as follows:
RPI for November:
50-64: 5.6% (6.1% in November)
65-74: 5.4% (6.0% in November)
75 and over: 5.6% (6.2% in November)