Saga's latest flash inflation indices show that over 50s still experience higher inflation

Tuesday 15 July 2014

Paul Green, Saga’s director of communication commented “Since the financial crisis really began to get underway in 2007 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. Younger age groups have benefitted greatly from falling mortgage interest payments as the Bank of England cut interest rates during the recession, whilst older age groups in general failed to benefit from this.

Saga's latest flash inflation indices show that over 50s still experience higher inflation

“In fact, over the same period they have continued to see their cost of living on essential items increase - it is little wonder that many are choosing to continue to work longer in order to help boost their retirement income."

Key points from the Saga Flash Inflation Indices:

 

  • Consumer Price Index (CPI) annual inflation was 1.9% in June, up from 1.5% in May.
  • Retail Price Index (RPI) annual inflation stood at 2.6% in June, up from 2.4% in May.
  • The largest contribution to the increase in the rate came from clothing, food and non-alcoholic drinks. There were no large downward effects to offset the change.
  • 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 June 2014 (May 2014 figures in brackets):
    • 50-64: 1.8% (1.4%)
    • 65-74: 1.6% (1.2%)
    • 75 and over: 1.9% (1.6%)
  • We calculate that annual retail price index (RPI) inflation was as follows for the over 50s age bands in June 2014 (May 2014 figures in brackets):
    • 50-64: 2.0% (1.8%)
    • 65-74: 2.1% (1.8%)
    • 75 and over: 2.1% (1.8%)
  • 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 brackets than for the UK population as a whole. However, there has been an uptick in price growth for all age brackets (50-64, 65-74 and 75 and over) due, in part, to rising prices on essential items. Year-on-year food prices have remain unchanged in June 2014 compared with falling prices of 0.6% in May 2014.  There are still price pressures on the over 50s due to electricity and gas prices rising strongly, by 6.0% and 5.1% year-on-year in June 2014, respectively.
  • Between September 2007 - when the financial crisis started to really get underway - and May 2014, 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: 24.9%
    • 65-74: 27.6%
    • 75 and over: 28.1%
    • Whole population (RPI): 23.2%

Ends

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