Saga's latest Flash Inflation IndexTuesday 20 May 2014
Saga's Flash Inflation Index shows how spending by the over 50s differs from younger age groups and the impact this has on the level of inflation they experience.
Saga's latest Flash Inflation Index
- Consumer Price Index (CPI) annual inflation was 1.8% in April, up from 1.6% in March.
- Retail Price Index (RPI) annual inflation stood at 2.5% in April, unchanged from 2.5% in March.
- The largest contribution to the increase in the rate came from transport (principally air fares, sea fares and motor fuels), an overall fall in the price of food 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 April 2014 (March 2014 figures in brackets):
- 50-64: 1.6% (1.5%)
- 65-74: 1.4% (1.4%)
- 75 and over: 1.7% (1.9%)
- We calculate that annual retail price index (RPI) inflation was as follows for the over 50s age bands in April 2014 (March 2014 figures in brackets):
- 50-64: 2.0% (1.9%)
- 65-74: 2.1% (2.0%)
- 75 and over: 2.2% (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 aged 75 and over brackets than for the UK population as a whole. This marks the first time since July 2011 that the rate of price increase for the 75 and over bracket has been below the overall rate of CPI-based inflation. Reflecting this, food prices have slowed considerably to 0.5% year-on-year growth in April 2014 from 1.9% in March 2014. There are still price pressures on the over 50s due to electricity and gas prices rising strongly, 6.0% and 5.1% year-on-year in April 2014, respectively.
- Between September 2007 - when the financial crisis started to really get underway - and April 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: 27.7%
- 75 and over: 28.4%
- Whole population (RPI): 22.9%
Full report and graphs available.
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