The elderly suffer much higher rates of inflation than the rest of us. The official rate of 4.4% for July pales in comparison to the 6.3% for the over-75s for the same month: a difference of 43%.

Things are getting worse for the very old, according to research by Alliance Trust, the international investment and financial services group. The over-75s are hit hardest by higher electricity and gas prices, which have both increased by around 13% over the past year. This age group spends almost 7% of their budget on electricity and gas bills, while under-30 households spend just 3% on such utilities.

Over-75s have also suffered from the ongoing surge in food prices, which have increased by almost 14% over the last year. This hits the over 75 year old age group hardest as they allocate 16% of their household budget to food compared to less than 9% for the under 30 households. Inflation for many staple foods is even higher, with bread & cereal and meat prices all having increased by 16% over the last year, and with dairy, cheese and egg prices up by 19%.

The overall increase for the over-75s in July was from 5.4% to 6.3%. But the research suggests that inflation rates facing all other age groups have also increased sharply, and most are now above the official rate.

Everyone is facing a high rate of inflation at the moment, but younger people benefit from spending a higher proportion of their incomes on discretionary items, such as audio visual goods, clothing and footwear, where prices are continuing to fall. The inflation rate facing the under 30s is the lowest of all the age groups, matching the official rate of inflation of 4.4%.

Over the past year, the prices of audio-visual goods have fallen by almost 12%, and clothing prices have dropped by more than 7%. The under-30s spend 6% of their budget on clothing, which is almost double the amount allocated by the over-75s.

“This current battle with inflation is particularly worrying for consumers as it is being driven by higher prices for basic goods and services,” said Shona Dobbie, head of the Alliance Trust Research Centre.

“This leaves households with less money to spend on the items where prices continue to fall. Although the oil price has been falling back over the last few weeks, and we could see petrol price inflation begin to ease, over the next couple of months, we expect little respite from high food and utility prices.

“This means that headline inflation is likely to remain at elevated levels and, even when inflationary forces begin to ease, we expect actual price levels for basic goods and services to remain high. We are concerned that this current high level of inflation is forcing policy makers to leave interest rates higher for longer, threatening the future growth path for the economy as a whole."

Kate Jopling, Head of Public Affairs at Help the Aged, reacted  strongly to the inflation figures: "2.5 million pensioners already live in poverty and 1.4 million live in deep poverty. It's high time the Government took the bull by the horns and ensured older people get all the benefits they're entitled to - more than £5bn goes unclaimed each year, lining the pockets of the Treasury instead of helping the older people who need it just to get by."

Alliance Trust's full latest report on ‘Inflation and Age' is available on www.alliancetrust.co.uk, by emailing This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   or phoning 08000 326323.
 

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