Saga's June flash inflation indices

Wednesday 18 June 2014

Consumer Price Index (CPI) annual inflation was 1.5% in May, down from 1.8% in April however given that expenditure patterns vary across households, experienced inflation rates will differ across age-bands. Saga's produces a monthly indicies that highlights the variances experienced by different consumer groups aged 50 and over.

Saga's June flash inflation indices

Saga Flash Inflation indices – May 2014 bulletin

Key points:

 

  • 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%

Ends

Full report, graphs and figures available.

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