Inflation rate facing the elderly hits a six-year high

The inflation rate amongst the elderly is at a 6 year high, an astonishing 7.8%. Alliance Trust's ongoing monthly study of age related inflation has found that the over 75 year olds continue to be hit the hardest by rising inflation, and the pain is getting worse. This age group saw their inflation rate jump from 7.0% to 7.8% in September. The inflation rates facing all other age groups increased by a smaller margin in September but now all face an inflation rate of 5% or higher.

Gas prices have increased almost 50% over the last year and electricity prices have risen by 30%, hitting the over 75 year olds the hardest. 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.

Over 75 year olds also continue to suffer from high food prices. Although food price inflation eased in September, prices are still almost 13% higher than a year ago. 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 basic food items is even higher than this. Bread & cereal prices have increased almost 16% and meat prices have gained 19% over the last year.

Although everyone is facing a high rate of inflation at this time, younger generations continue to benefit from the fact that they spend a higher proportion of their incomes on discretionary items, such as audio visual goods, clothing and footwear, where prices continue to fall. Over the last year, the prices of audio-visual goods have fallen by 12% and clothing prices have dropped by 7%. The under 30s spend 6% of their budget on clothing, which is almost double the amount allocated by the over 75 year olds. The inflation rate facing the under 30s is the lowest of all the age groups at 5.0% and is in fact lower than the official rate of 5.2%.

14 October 2008 © Moneyextra.com

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