18th February 2014
The over 75s and the under 30s faced the highest rate of inflation in January at 2.1% according to Alliance Trust inflation survey. The firm says the over 75s suffered the highest rate of inflation for the whole of 2013 and this trend has continued into 2014, as they spend a larger share of their budgets on basic goods such as gas and electricity. The 65 to 74 year olds have faced the lowest rate of inflation in 11 out of the last 12 months, thanks to lower inflation in food, petrol and package holidays.
Inflation rates by age group
|Age Group||Inflation Rate|
|30-49 Year Olds||1.8%|
|50-64 Year Olds||1.8%|
|65-74 Year Olds||1.8%|
|75 and Over||2.1%|
This month’s official inflation report showed that the headline rate of inflation fell from 2.0% to 1.9%. Alliance Trust’s monthly study of inflation rates affecting different age groups found that three out of five age groups have an inflation rate lower than the official figure. The 30-49 year olds, the 50-64 year olds and the 65-74 year olds all have an inflation rate of 1.8%. However, the over 75s have now been joined by the under 30s in facing the highest rate of inflation, at 2.1%. There is some hope for over 75s however, with gas price inflation falling from 7.8% to 6.7% and electricity price inflation falling from 8.1% to 8.0%, easing the pressure on budgets.
The under 30s are also facing the highest inflation rate due to the continued effect of the sharp increase in tuition fees in 2012. This has kept education price inflation at 10.3% for the last four months and continues to keep the under 30s inflation rate at a high level, even though this age group spends less on food and energy prices than the older age categories. The remaining age groups, the 30-49, 50-64 and 65-74 year olds are benefiting from inflation that is lower than the headline rate, helped by lower fuel price inflation, which continued to fall in January from -1.4% to -1.8%. In particular, the younger pension age category, the 65-74 year olds have faced the lowest rate of inflation in 11 out of the last 12 months, thanks to lower inflation in food, petrol and package holidays.
Spending Weights – this table shows the spending patterns of different age groups across different spending categories
|Age Group||Food||Electricity||Gas||Petrol||Clothing/ Footwear|
|30-49 Year Olds||11.9%||2.3%||2.2%||6.0%||5.9%|
|50-64 Year Olds||12.4%||2.5%||2.5%||6.6%||6.1%|
|65-74 Year Olds||14.2%||2.9%||2.9%||5.7%||4.5%|
|75 and Over||16.4%||4.0%||4.0%||3.8%||4.0 %|
Source: The Family Spending Survey: 2013 edition and In-house Analysis
Alliance Trust economic analyst Ross Barr says: “The over 75s inflation rate has started this year in the same fashion as the whole of 2013, with the oldest age category facing the highest rate of inflation. The main contribution still comes from higher gas and electricity prices and, due to the price hikes announced a few months ago, we can expect these rates of inflation to remain in place for much of 2014, keeping the inflation rate of this age group elevated. However, the over 75s have now been joined by the under 30s in suffering the highest rate of inflation due to the continued effect of tuition fee price increases.
“Our research shows that there is still a clear divergence between the younger pension age category, the 65-74 year olds, and the older pension age group of the over 75s. This demonstrates that it is difficult to apply a generic rate of inflation to all age groups and that small changes in spending patterns can greatly affect the rate of inflation one faces”.