Inflation is having a large impact on the over 55s as research shows that they are, on average, £600 worse off per year.
The cost of inflation on the over 55s is greater than official figures show, according to the Silver RPI launched today by Age UK Enterprises.
The Silver RPI shows that since the beginning of 2008, those aged over 55 have experienced price rises at almost two per cent above that suggested by headline RPI figures. This rises to four per cent above headline RPI for those over 75. The gap between real and headline inflation over that period has cost the average 60 year old £620 a year, rising to over £700 for someone aged between 65 and 69.
The primary reason for this has been the fall in mortgage interest rates which has had less effect on those in later life who are less likely to carry mortgage debt. This means that overall costs for those in later life have not reduced as greatly as for the population as a whole and, in addition, they have faced cost increases on items where they spend proportionally more such as utilities.
The situation is also made worse on those in later life by the fact that the return on their savings has been eroded by low interest rates which coupled with rising commodity and food prices is putting their personal finances under pressure, as Gordon Morris, Managing Director, Age UK Enterprises, points out:
“In the aftermath of a global recession many households are struggling with their finances but, as revealed by the Silver RPI, those in later life are disproportionately affected, particularly in recent times. The impact of inflation on over 55s has been substantially underestimated and it worsens as you age, with over 75s experiencing cost rises on average four per cent above official measures.”
“For a typical over 60 year old, it means they are on average more than £620 a year worse off than previously thought.”