Saga Flash Inflation indices – May 2014 bulletin
- Consumer Price Index (CPI) annual inflation was 1.5% in May, down from 1.8% in April.
- Retail Price Index (RPI) annual inflation stood at 2.4% in May, down from 2.5% in April.
- The largest contribution to the decrease in the rate came from transport (principally air fares), an overall rise in the price of motor fuels was the largest offsetting factor.
- 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 2014 (April 2014 figures in brackets):
- 50-64: 1.4% (1.6%)
- 65-74: 1.2% (1.4%)
- 75 and over: 1.6% (1.7%)
- We calculate that annual retail price index (RPI) inflation was as follows for the over 50s age bands in May 2014 (April 2014 figures in brackets):
- 50-64: 1.8% (2.0%)
- 65-74: 1.8% (2.1%)
- 75 and over: 1.8% (2.2%)
- Figures 1 and 2 illustrate the annual rates of inflation for the over-50s. Annual CPI-based inflation is lower for 50-64, 65-74 and age 75 and over brackets than for the UK population as a whole. This marks the slowest price growth for the 50-64 and the 65-74 age brackets since September 2009. Food price growth has slowed considerably to a year-on-year decrease of 0.6% in May 2014 compared with growth of 0.5% in April 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 May 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: 24.6%
- 65-74: 27.4%
- 75 and over: 28.0%
- Whole population (RPI): 23.0%
Full report, graphs and figures available.