Inflation threat to older people

08/07/2008

Older people are facing spiralling inflation on basic goods and services - fast outstripping any increases in their wages or pension.

While the official rate of inflation – the level at which any pension rises for 2009/10 will be fixed – is less than 4%, many basic food prices have risen by around 20% over the last year; while in 2008 alone, petrol prices have soared by up to 20% and energy by a similar amount.

The impact upon many struggling on a fixed income has been devastating. In the last 12 months alone, new figures released by the Office for National Statistics reveal that an additional 300,000 pensioners have seen their status officially decline to that of “living in poverty”. Mervyn Kohler, Special Adviser for Help the Aged, says: “The Government should be mortified by the latest figures. On average around 822 pensioners each day are being forced into poverty.”

The situation is also serious for those lower paid older workers who are seeing any wage claims pegged back to the official rate of inflation – or even below in some cases.

Says Mervyn Kohler, “When older people live on a fixed income it is virtually impossible for them to pull themselves out of poverty.  Pensioners often have to cut back on essential household items, just to survive. This is a disgrace.”

Help the Aged has joined Age Concern to try to persuade the Government to do more to encourage greater take up of benefits. “Over £5 billion worth of benefits are going unclaimed each year,” says their spokesperson Paul Bates. “Those benefits could make a real difference to the living standards of thousands of older people.  We believe that the Government must do more to highlight what benefits are available and how they can be claimed.”

Meanwhile, the Government’s pledge to eliminate fuel poverty in the coming years has all but been officially abandoned. While the government estimates 2.5 million households are now in fuel poverty - defined as when a household spends more than 10% of household income on fuel bills - the industry watchdog Energywatch says the figure is more than four million – and growing.

News that senior energy industry insiders are predicting further price rises of up to 40% this year will put a further 1.6 million pensioners into fuel poverty according to the National Pensioners Convention (NPC). The price comparison website uSwitch.com say that such a rise would mean the average household energy bill hitting a crippling £1,467 this winter – average bills were £912 in January 2008, so in total, consumers are looking at a 61% or £555 increase in energy bills in a year.

Age Concern and Help the Aged are calling on energy firms to unite to give pensioners a £50million energy bill rebate this winter to help those in fuel poverty, doubling their current assistance for their poorest customers.

NPC President Frank Cooper told Mature Times: “It’s time the government realised that the inflation rate felt by pensioners is far greater than the official figure. For millions of older people their biggest expense is on council tax, food and fuel - yet their state pension remains tied to an arbitrary price index which bears no relation to the real costs of living.

“The market won’t sort out this mess. Ministers must intervene - and start by raising the state pension and restoring its link to earnings now.”