Fall In June Inflation Is Some Good News

Inflation Remains Above Target And Higher For Over 50s

by Dr. Ros Altmann

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Commenting on today’s inflation figures, Dr Ros Altmann, Director General of over-50s specialists Saga, says:

“We welcome this fall but inflation is still disappointingly above the Government’s 2% target rate. Today’s rates are particularly good news for the over 50s who have repeatedly seen their income eroded by inflation.”

“With the Bank of England now suggesting that inflation will remain above the 2% target for some time, its corrosive effects are set to continue. If inflation sticks at 3% over a period of the next 20 years then the over 50s will find their incomes cut in half.

“Inflation rates remain higher for the over-50s, reflecting in part the fact that utility prices are still much higher than a year ago – gas prices are 15.4% higher, while electricity prices are 8.0% higher.”

Saga’s Monthly Price Indices*, compiled by research house Cebr, show that inflation on both the RPI and CPI measures remains higher for over 50s compared with the UK as a whole.

Even more worrying, the Saga Price Indices show, the cost of living in May 2012, compared with September 2007 – when the financial crisis started to really get underway – has risen substantially more for the over-50s than 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 in general failed to benefit from this. Compared with September 2007, the cost of living has risen for different age bands as follows:

• 50-64: 19.1%
• 65-74: 22.4%
• 75 and over: 22.2%
• Whole population (RPI): 16.5%

ENDS

NOTES FOR EDITORS:

*Saga created its own Saga Price Indices, with respected research house, Cebr, to explore how inflation is affecting the over 50s because price rises can be felt differently due to different spending patterns across age groups:

The annual consumer price index (CPI) inflation was as follows for the over 50 age bands in May 2012 (April 2012 figures in brackets):
50-64: 2.9% (3.1%)
65-74: 2.9% (3.2%)
75 and over: 3.3 % (3.6%)

The annual retail price index (RPI) inflation was as follows for the over 50 age bands in May 2012 (April 2012 figures in brackets):
50-64: 3.3% (3.5%)
65-74: 3.4% (3.7%)
75 and over: 3.8 % (4.0%)