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Over 55s face additional living costs of £984.28

Published on 09 August 2011 10:00 AM

SILVER RPI: Over 55s faced additional living costs of £984.28 per year since 2008  due to inflation

This is despite gap between inflation for over 55s and the general population narrowing in Q2 2011.

Latest findings of the Silver RPI published by Age UK Enterprises, the commercial services arm of charity Age UK, show that since 2008 the extra increase in prices measured by the Silver RPI, relative to the Headline RPI, is now costing the average over 55 year old an additional £984.28 (1) per year, when compared to the population as a whole.

The gap between inflation experienced by the general population and those in later life since 2008 is in part due to the impact of a low interest rate environment. This reduced mortgage payments for the majority of homeowners but benefited those in later life less because they are less likely to carry mortgage debt.

Changes in cost of living since January 2008:

Age Band

Increase in cost of Silver RPI basket

Change relative to Headline RPI

Extra annual expenditure due to % cost rise

55-59 15.77% 3.82% £1,016.96
60-64 16.61% 4.67% £1,124.23
65-69 17.32% 5.37% £1,130.28
70-74 17.58% 5.63% £989.07
75+ 16.99% 5.04% £671.91
Over 55s 16.86% 4.91% £984.28
Headline 11.95%

Commenting on the findings, Gordon Morris, Managing Director, Age UK Enterprises said: 'The fact remains that since 2008, people in later life have consistently experienced price rises at a far higher rate than Headline RPI.  At an age when significant long-term financial decisions are being made, the Silver RPI is crucial to helping people better plan for their future costs.'

While three year trends demonstrate how cost rises worse affect those in later life, there has been a slowing of inflation for over 55s in the last three months suggesting those in later life are perhaps not as financially insecure as first thought.

Over 55s have experienced inflation at 0.27 percent below Headline RPI since March 2011, which in monetary terms suggests this age group is £53.22 (2) a year better off for this period.  However, this improvement does little to change the three year trend, which shows that cost rises have worse affected those in later life by £984.28 more than the population as a whole since January 2008.

Changes in cost of living March - June 2011:

Age band

Increase in cost of Silver RPI basket

Change relative to Headline RPI

Extra annual expenditure due to % cost rise

55-59 1.26% -0.27% -£71.39
60-64 1.28% -0.25% -£59.97
65-69 1.29% -0.24% -£50.64
70-74 1.28% -0.25% -£43.85
75+ 1.21% -0.32% -£42.68
Over 55s 1.26% -0.27% -£53.22
Headline RPI 1.53%

Gordon Morris continued: 'It is of course welcome news that Silver RPI for March to June 2011 shows a lessening of the gap between Headline RPI and cost rises experienced by those over 55. But it is still important to help those in later become ‘smarter' consumers, particularly when it comes to financial products and services. This is why we are committed to supporting consumers to shop around so they buy the best value deals and the most appropriate products for their needs.'

Erik Britton, Fathom Financial Consulting said: 'The Silver RPI continues to highlight that since 2008, people over the age of 55 are financially worse off than Headline figures suggest. While this has lessened in the first part of 2011, looking ahead we predict that inflation will rise through the summer reflecting increases in utilities prices. This will have a negative impact on all consumers, but as the over 55s spend a greater proportion of their overall budget on gas and electricity, it will have most impact on those in later life.'

For background information on the Silver RPI please click here. 

- ENDS -

For more information or to speak to a spokesperson contact Andy Martinus, Imogen Dunn or Rhys Phillips on 020 7360 7877 or email us.

1/2 The additional costs faced by older consumers is derived by first calculating the difference between the inflation rates experienced by each Silver RPI age band, and the inflation rate experienced by the population as a whole. This difference is then multiplied by average weekly expenditure on the RPI basket by each Silver RPI age band in the base period. Finally, this figure is multiplied by 52 to given an annual equivalent amount. Over the twelve months to June 2011, Headline RPI inflation was 5.0% (ONS: July 2011)

Notes to Editors

About the Silver RPI

The Silver RPI was developed by Age UK Enterprises in partnership with former Bank of England inflation specialists, Fathom Consulting, and is the most complete measure of cost increases in later life. It uses information from the Living Costs and Food Survey (LCF) to re-weight the 78 items that make up the official RPI and better reflect the expenditure patterns of over 55s. The measure is the first to consider inflation at five year age bands above 55 years of age and unlike existing ONS pensioner measures it includes all housing costs and households at all income bands. The Silver RPI was first launched in November 2010 and is updated quarterly, with the methodology adjusted for the February report to include more up to date information on expenditure patterns. To reflect this, the weight attached to utility bills was increased, and consequently an increased estimate of the total price rises experienced by those in later life since January 2008.

The actual change in expenditure is based on RPI weights that are updated every February by the ONS. This shows how different age groups have varied their expenditure on different items over the past 12 months.

About Erik Britton, Director, Fathom Consulting

Erik Britton joined Fathom as a director in October 2007. He has 18 years of experience as a professional economist and was formerly a director at Oxford Economics. Prior to Oxford Economics, Erik was involved in economic modelling and forecasting, first at a London-based consultancy called MMD, and then at the Bank of England. At the Bank of England, Erik spent five years in the Monetary Analysis Division where he ran the Bank's UK macroeconomic model, co-ordinated its international forecast, and also managed a team of economists responsible for analysing the economics of the corporate sector.

About Fathom Consulting

Fathom Consulting is an independent consultancy which combines macroeconomic analysis together with financial market research. Fathom's team of economists combines a high degree of technical expertise with many years of practical experience in policy-making and financial institutions. Their combined experience of analysing both the global economy, the UK and the Bank of England in particular, is unrivalled by any other private sector institution in the UK.

Age UK

For media enquiries relating to Wales, Scotland and Northern Ireland please contact the appropriate national office: Age Scotland on 0131 668 8055, Age Cymru on 029 2043 1562 and Age NI on 028 9024 5729.

Age UK is the new force combining Age Concern and Help the Aged, dedicated to improving later life.

We provide free information, advice and support to over five million people; commercial products and services to over one million customers; and research and campaign on the issues that matter to people in later life. Our work focuses on five key areas: money matters, health and well being, home and care, work and training and leisure and lifestyle. We work with our national partners, Age Scotland, Age Cymru and Age NI (together the Age UK Family), our local Age UK partners in England and local Age Concerns. We also work internationally for people in later life as a member of the DEC and with our sister charity Help Age International.

Age UK is a charitable company limited by guarantee and registered in England (registered charity number 1128267 and company number 6825798). Age Concern England and Help the Aged (both registered charities), and their trading and other associated companies merged on the 1st April 2009. Together they have formed the Age UK Group ("we"). Charitable services are offered through Age UK and commercial products are offered by the Charity's trading companies, which donate their net profits to Age UK (the Charity).

Age UK Enterprises

To fund its charitable activities, Age UK needs a constant flow of independent income. It seeks to achieve this through a balance of traditional fund raising and trading activities.

The trading activities, through Age UK Enterprises enable it to meet the needs of older people, through products specifically designed to meet these needs; quality products such as general insurance and energy Services. Age UK Enterprises is the commercial services arm of Age UK.

Age UK Enterprises incorporates: Age UK Energy, Age UK Insurance Services and Age UK Guaranteed Funeral Plans. Log on to www.ageuk.org.uk/products for details.

Age UK Motor Insurance is now proudly on Which? Magazine's Recommended Providers List of car insurers. Which? Magazine analyse the whole UK car insurance market to find out which brands offer the best policies. Instead of picking Best Buys based on specific scenarios (that are only relevant in specific cases), the experts at Which? magazine focus on the quality of policies.

Age UK Enterprises is part of the Social Enterprise Coalition; an organisation that represents a wide range of social enterprises with the overarching aim of working in partnership for the creation of effective sector products, services and knowledge-sharing networks to help stimulate and encourage growth, development and sustainability of social enterprises in England.

Age UK Enterprises scooped up the ‘Customer Care Award' at the prestigious 2010 British Insurance Awards. The judges singled out Age UK Enterprises for its exceptional customer service which is provided by Ageas Insurance Ltd, as well as for glowing customer testimonials with a ‘world-class' customer satisfaction score of 85 per cent, and 89 per cent of customers saying that they would recommend Age UK Enterprises/Ageas (Insurance UK).

Age UK Enterprises Limited is authorised and regulated by the Financial Services Authority for insurance mediation (311438) and to introduce potential annuity customers. Age UK Enterprises Limited is registered in England and Wales No. 3156159, registered office: Astral House, 1268 London Road, London SW16 4ER. VAT Number: 710 3843 66.

Age UK Enterprises Limited is a wholly owned subsidiary of Age UK (registered charity No. 1128267 and registered company No. 06825798) and donates its net profits to Age UK. Age UK England (charity number 261794) has merged with Help the Aged (charity number 272786) to form Age UK, a charitable company limited by guarantee and registered in England: registered office address 207-221 Pentonville Road, London, N1 9UZ, company number 6825798, registered charity number 1128267. Age UK Enterprises is based at Tavis House,1-6 Tavistock Square, London WC1H 9NA.

Last updated: Oct 06 2017

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