Inflation rises for all age groups as food prices soar

Although the official headline rate of inflation remained unchanged at 2.1% in November, Alliance Trust’s independent study found that the inflation rate facing all five of its identified age groups increased over the month.

Inflation continues to hit the over 75s and the under 30s hardest – these two groups have both seen their inflation rate increase to 2.6%. Alliance Trust Research Centre’s headline findings, based on the updated spending patterns of different age groups and analysis of official November inflation figures are:

Inflation increased across all age groups over the month. This was due to an acceleration in both food and fuel prices. Food price inflation remained at a six-month high of 5.1%.

The under 30s face the same inflation rate as the over 75s. Both age groups face an inflation rate of 2.6%, which is 24% higher than the official headline rate of 2.1%.

Rising food prices continue to weigh on the elderly, who spend a large proportion of their monthly budget on food. Prices of dairy products, and oils and fats, have all increased by around 14% over the last year, while bread and cereal prices are up 6%.

The youngest age group, the under 30s, have experienced a sharp rise in inflation due to rising prices for food, rent and education. Education costs are up more than 13% over the last year.

The rising oil price has pushed petrol prices higher. Fuel price inflation is now at a 26 month high of 17%.

Alliance Trust Research Centre’s age-related inflation study has been updated using official price data for November. The official rate of headline inflation remained unchanged at 2.1% during the month, but our study shows that all five of our identified age groups have seen their inflation rate increase over the month, to levels which are higher than the official headline. This is particularly severe for the oldest and youngest age groups. Both the over 75s and the under 30s are facing an inflation rate of 2.6%, which is 24% higher than the official headline rate. Although temporary declines in gas and electricity price inflation have helped to reduce some of the energy cost pressures facing the elderly, this group is being hit particularly hard by higher food and petrol prices. Food price inflation remains at a six month high of more than 5%, driven by high price growth for many basic products, such as milk, butter, cereals and bread.

The inflation rate facing the under 30s has increased for the fourth consecutive month and also stands at 2.6%. This reflects the fact that young households are not only hit hard by the impact of higher food prices, but face additional pressures from higher rents and education costs. Education costs have risen by more than 13% over the last year.

Shona Dobbie, Head of the Alliance Trust Research Centre said, " Our study shows the extent to which the impact of inflation can differ from what the government’s headline figure suggests, with big variations across different age groups. Since our study began in 2003, the elderly have consistently suffered the highest levels of inflation. Over the past few months, they have been matched by the young. Although the official headline rate of inflation remained unchanged at 2.1% this month, the rate of inflation facing both the elderly and the young has increased, to a much higher level of 2.6%. Pensioners have now been suffering higher-than-average inflation for almost five years, and this has been steadily eating into their budgets. Unfortunately, we suspect that this situation could continue for some time. Older households are particularly vulnerable to the impact of rising prices for basic goods such as food and household energy. We are also concerned about the more recent increase in the rate of inflation facing young adults, largely due to higher rents and education costs, as well as the costs of basic goods.”

“Although the official headline rate of inflation remained unchanged this month, inflationary pressures are still strong for many basic goods. The high oil price has pushed fuel prices to a 26 month high, while price inflation for milk, cheese and eggs, and bread and cereals, are both at their highest levels on record. Rising food prices have the biggest impact on the inflation rate facing the over 75s since this age group spends a much higher proportion of their household budgets on basic items such as these.”