Over 75s continue to experience higher inflation

Wednesday 18 December 2013

As inflation falls for the population as a whole, the over 65s continue to experience inflation significantly higher at 2.5% compared to the national CPI inflation figure of 2.1%.

Over 75s continue to experience higher inflation

Saga Flash Inflation indices – November 2013 bulletin

"Our research shows that over 65s continue to experience signficantly higher inflation than other age groups standing at 2.5% compared with 2.1% for the populuation as a whole.  This gap is likely to widen further as fuel prices increase and put further pressure on this age group who spend a greater proportion of their expenditure on heating their homes".

Key points:

  • Consumer Price Index (CPI) annual inflation was 2.1% in November, down from 2.2% in October 2013.
  • Retail Price Index (RPI) annual inflation stood at 2.6% in November, unchanged from October.
  • The largest downward contribution to the CPI inflation rate came from food and utilities.
  • Given that expenditure patterns vary across households, experienced inflation rates will differ across age-bands. We calculate that annual consumer price index (CPI) inflation was as follows for the over 50s age bands in November 2013 (October 2013 figures in brackets):
    • 50-64: 1.9% (2.1%)

    • 65-74: 1.9% (2.0%)

    • 75 and over: 2.3% (2.5%)

  • We calculate that annual retail price index (RPI) inflation was as follows for the over 50s age bands in November 2013 (October 2013 figures in brackets): 
    • 50-64: 2.3% (2.3%)

    • 65-74: 2.3% (2.4%)

    • 75 and over: 2.4% (2.5%)

  • Figures 1 and 2 illustrate the annual rates of inflation for the over 50s. Annual CPI-based inflation is lower for 50-64 and 65-74 age bracket. This largely reflects an easing of annual food price inflation, which fell to its lowest rate in over a year in November. The rate of inflation faced by the over-75s remained higher than the national average, as other factors, such as rising utility costs, held up inflation.

  • Between September 2007 - when the financial crisis started to really get underway - and November 2013, the cost of living has risen substantially more for the over-50s than for the overall population on the broad-based RPI measure of prices. While younger age groups benefitted greatly from falling mortgage interest payments as the Bank of England cut interest rates during the recession, older age groups – who had largely or entirely paid off their mortgages –  in general failed to benefit from this. Compared with September 2007, living costs have risen for different age bands as follows:
    • 50-64: 23.2%
    • 65-74: 25.8%
    • 75 and over: 27.1%
    • Whole population (RPI): 21.2%

Full report and graphs available.

 

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