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PENSIONERS HIT HARDEST BY SURGING FOOD PRICES AND RISING INFLATION

Alliance Trust’s independent study of age related inflation has found that the over 75 year olds continue to be hit the hardest by surging inflation - this age group saw their inflation rate increase from 4.8% to 5.4% in June. The inflation rates facing all other identified age groups have also increased and the majority are running ahead of the official headline rate of inflation of 3.8%.

Inflation continues to be driven by sharply rising basic goods prices. The over 75 year olds are hardest hit by surging food prices, which have risen by almost 11% over the last year. This hits the over 75 year olds hardest as they allocate 16% of their household budget to food compared to less than 9% for the under 30 households. Within this, dairy prices have risen over 19% and oil and fat prices are up over 28%. In each of these categories the over 75 year olds allocate almost double the proportion of their household budgets when compared to the younger households. The over 75 year olds are also hit hardest by higher electricity and gas prices which rose 11% and 10% respectively. This age group spends almost 7% of their budget on electricity and gas bills whereas the under 30 households spend just 3% on such utilities.

In contrast, younger generations spend a higher proportion of their incomes on clothing, footwear and audio-visual goods, where prices are continuing to fall. This benefits the under 30s who spend 6% of their budget on clothing, almost double the amount allocated by the over 75 year olds. This is reflected by the fact that their inflation rate is running in line with the official rate of inflation of 3.8%.

The inflation rate facing the over 75 year olds surged to 5.4% in June. This is the highest level inflation has reached in the history of our six year study and is also 42% higher than the official rate of inflation of 3.8%.

Food prices have jumped by almost 11% over the last year, electricity prices have risen by over 11%, and petrol prices are up 24%. Rising basic good prices hit the elderly hardest as they spend a higher proportion of their budget on such goods.

This month also marked the first time that the 30 to 49 year olds have faced an inflation rate in excess of 4%.

Alliance Trust Research Centre warns that rising prices for basic goods could push inflation even higher over the next few months, forcing the authorities to leave interest rates higher for longer.


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