“Of course today's reported fall in inflation is a bit of welcome relief for hard-pressed savers and those on fixed incomes and represents some better news for them.
''Nevertheless, inflation remains above the Government’s 2% target and older people are still experiencing higher price rises than other age groups. The over-50s faced elevated utilities prices in June, gas and electricity prices were 15.4% and 8.0% higher than a year ago, respectively. Although clothing and footwear prices fell by 0.8% over the 12 months to June, over-65s spend proportionately less on clothing than the population as a whole, meaning this downward pressure on inflation was felt less by this age group.
“Our Saga Price Indices*, compiled by research house Cebr, show that inflation on both the RPI and CPI measures remains higher for over 50s compared with the UK as a whole. Indeed, the cost of living in June 2012, compared with September 2007 – when the financial crisis started to really get underway – has risen substantially more for the over-50s than the overall population. And, while younger age groups benefited greatly from falling mortgage interest payments as the Bank of England cut interest rates during the recession, older age groups in general failed to benefit from this as they have less mortgage debt.”
Compared with September 2007, the cost of living (rpi) has risen for different age bands as follows:
o 50-64: 18.9%
o 65-74: 22.2%
o 75 and over: 22.0%
o Whole population (RPI): 16.3%
Given that expenditure patterns vary across households, experienced inflation rates will differ across age-bands, the annual consumer price index (CPI) inflation was as follows for the over 50 age bands in June 2012 (May 2012 figures in brackets):
o 50-64: 2.5% (2.9%)
o 65-74: 2.6% (2.9%)
o 75 and over: 3.0% (3.3%)
The Saga Price Indices also show that annual retail price index (RPI) inflation was as follows for the over 50 age bands in June 2012 (May 2012 figures in brackets):
o 50-64: 3.0% (3.3%)
o 65-74: 3.1% (3.4%)
o 75 and over: 3.5 % (3.8%)
We certainly hope that inflation will continue to fall, in order to help relieve the pressure on the real incomes of older age groups.