Over 55s an Average £30 per Month Worse Off Due To Rising Prices since September
(PRWeb UK) March 4, 2011
Latest figures exhibit the gap between the price rises experienced and headline RPI1 nowadays costs a mean over 55 year previous £907.202 a year, which is a £303 rise in the monthly cost of living since September 2010.
Age band % difference between Silver RPI and Average cost of gap between Silver RPI and
headline RPI since January 2008 headline inflation per year since January 2008
55-59 3.4% £904
60-64 4.2% £1,015
65-69 4.9% £1,038
70-74 5.3% £925
75+ 4.9% £654
Average over 55 5.% £907.20
The Silver RPI is published to coincide with the Bank of England Quarterly Inflation Report in February 2011 and shows that the gap between costs for those in later life and the general population has widened. This is due to the continued impact of low mortgage interest rates which have less effect on those in later life as they are less likely to carry mortgage debt, and in the last quarter, cost increases in products and services such as energy and food that over 55s spend proportionally more on.
The Silver RPI shows that between September 2010 and January 2011 the price of energy for the over 55s has increased by 6. percent. Energy now accounts for on average 3.6 percent of expenditure for those between 55 and 59 years old, almost doubling to 7.1 percent for those over 75, compared to 4% in the general population.
Age UK Enterprises, recognising the impact of rising energy prices on those in later life, is committed to helping customers manage their costs. While the sector as a whole has passed on price rises due to wholesale price increase, Age UK Enterprises in conjunction with E.ON delayed a six percent increase5 until April 2011 for Age UK Energy customers, when the worst of the cold weather will be over, and has fixed prices for new customers until April 20136. In addition, every year each Age UK Energy gas or dual fuel customer receives a guaranteed additional cold weather payment from E.ON, supplementary to the Government’s Winter Fuel and Cold Weather Payments, and an additional payment for every day when the temperature drops below freezing7.
Commenting on the findings, Gordon Morris, Managing Director, Age UK Enterprises said: “The latest Silver RPI demonstrates the shocking impact of rising prices on over 55s who are now more than £907.20 a year worse off than official inflation measures estimate. There is a widening gap between the inflation experienced by the general population and those in later life, and this worsens with age. A typical 70-74 year old now experiences ‘real’ price rises at 5.3 percent above headline RPI figures.”
He continued: “The rise in everyday costs is in part due to over 55s spending proportionally more on products and services, such as utilities, that have increased rapidly in price in the last quarter. We believe the financial services industry has to do more to help consumers in later life manage their costs. This is why E.ON provided its Age UK Energy customers with over £4 million in Cold Weather Payments in 2010 and has created a fixed Energy price option for new customers until 2013.”
Erik Britton from Fathom Consulting said: “The Silver RPI shows that inflation has been far higher over the last few years for those over 55 than for the general population. Inflation effects are not homogeneous, and measuring those differences helps those in later life plan for their financial future by taking them into account.”
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 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.
ENDS
For more information or to speak to a spokesperson contact Natalie Orringe, Andy Martinus or Jo Roberts on 020 7360 7878 or ageuk(at)teamspiritpr(dot)com
1 Headline RPI for over 55s is 5.1% (ONS: January 2011)
2 The additional costs faced by older consumers is calculated by multiplying the difference in percentage change in prices faced by each age band and that faced by the population as a whole since January 2008. This is then multiplied by the average weekly expenditure for that age band and finally multiplied by the number of weeks in a year (52) to establish the annual cost of these extra price rises.
3 Calculated by applying the average increase in pricing since September 2010 experienced by those aged over 55 (1.95%) to the monthly cost of the RPI basket to those aging over 55 in 2008 (£1710.61).
4 Average headline RPI rates: 2008 – 4.3%, 2009 – -.78%, 2010 – 4.6%
5 Just under 6% for dual fuel customers and 9% for electricity and 3% for gas customers
6 For those new customers signing up to Age UK Price Protection April 2013 tariff
7 Age UK customers aged 60 or over receive extra payment for every day between December and February that the temperature falls below freezing. The temperature is taken from the Pickering Weather Station in North Yorkshire, one of the coldest places in the UK
NOTES TO EDITORS
About Erik Britton, Director at 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 combine 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.
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Age UK is the new force combining Age Concern and Help the Aged. The Age UK family includes Age Scotland, Age Cymru, Age NI and Age Concern Enterprises – the trading arm of Age UK.
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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.
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