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Headline inflation remains stable

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16/01/2008

Alliance Trust has found that the inflation rates facing all five of its identified age groups remained unchanged over the month, despite higher food and fuel prices.

Inflation continues to hit the over 75s and the under 30s hardest – these two groups have the highest inflation rate at 2.6%.

Alliance Trust’s age-related inflation study has been updated using official price data for December. The official rate of headline inflation remained unchanged at 2.1% during the month, and its study shows that all five of its identified age groups have also seen no change to their inflation rate over the month.

However, all five of its identified age groups are facing a rate of inflation which is higher than the official headline. This is particularly severe for the oldest and youngest age groups. Both the over 75s and the under 30s continue to face 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 continues to be hit particularly hard by higher food and petrol prices. Food price inflation is now at an eight-month high of close to 6%, driven by high price growth for basic products, such as milk, butter, cereals, bread and vegetables.

Shona Dobbie, head of the Alliance Trust Research Centre, said: “Our study continues to highlight the extent to which the impact of inflation can differ from the official headline figure.

“In particular, we repeatedly identify big variations in the inflation rates applying across different age groups, reflecting the different spending patterns of each group. Since our study began in 2003, the elderly have consistently suffered the highest levels of inflation.

“Although the official headline rate of inflation remained unchanged this month, inflationary pressures are still strong for many basic goods which we all have to buy on a regular basis. This makes inflation feel much higher than the official level, and leaves less money left over to spend on the more discretionary items, such as clothing and audio-visual goods where prices continue to fall.”
 

 

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