SAGA FLASH INFLACTION INDICES MAY 2013

Tuesday 18 June 2013

Inflation picked up across all of the over 50s age groups in May. CPI-based inflation for the over-75s hit 3.0% in May, notably higher than 2.7% for the UK as a whole. As in previous months, this largely reflects high rates of utility price inflation at present.

SAGA FLASH INFLACTION INDICES MAY 2013

Also, although food price inflation fell from 4.6% in April to 4.3% in May, this is still higher than overall inflation and is a cost pressure which hits the over 75s relatively hard, given a relatively high proportion of their expenditure consists of foodstuff.

 Key points:  

 

  • Consumer Prices Index (CPI) annual inflation rose to 2.7% in May 2013, up from 2.4% in April.

 

  • Retail Prices Index (RPI) annual inflation stood at 3.1% in May 2013, up from 2.9% in April.

 

  • The largest upward contributions to the changes in the rates of inflation came from transport and clothing.  The largest downward contributions came from food.

 

  • 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 May 2013 (April 2013 figures in brackets): 

        > 50-64:  2.6% (2.4%)

        > 65-74: 2.4% (2.2%)

        > 75 and over: 3.0% (2.9%)

 

  • We calculate that annual retail price index (RPI) inflation was as follows for the over 50s age bands in May 2013 (April 2013 figures in brackets):

        > 50-64: 2.9% (2.7%)

        > 65-74: 2.8% (2.7%)

        > 75 and over: 3.0% (2.9%)

 

  • Figures 1 and 2 illustrate the annual rates of inflation for the over 50s. CPI-based inflation is notably higher for the over-75s than for the UK as a whole. As in previous months, this largely reflects high rates of utility price inflation at present. Also, although food price inflation fell from 4.6% in April to 4.3% in May, this is still higher than overall inflation and is a cost pressure which hits the over 75s relatively hard, given a relatively high proportion of their expenditure consists of foodstuff.  

 

  • As Figure 4 shows, the cost of living in May 2013, 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, 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 in general failed to benefit from this. Compared with September 2007, the cost of living has risen for different age bands as follows:

        > 50-64: 22.5%

        > 65-74: 25.2%

        > 75 and over : 25.7%

        > Whole population (RPI) : 20.2%

 

ENDS

 

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