The under 30s and the over 75s are suffering the highest rate of inflation at 1.7%. The over 75s continue to suffer from high gas and electricity price inflation. The under 30s inflation rate is persistently high due to education costs. The 50-64 year olds have the lowest rate of inflation at 1.3%, as they benefit the most from the drop in petrol price inflation.
This month’s official inflation report showed that the headline rate of inflation fell from 1.7% to 1.6%. Alliance Trust’s monthly study of inflation rates affecting different age groups found that all age groups saw a decline in their inflation rates over the month. But only two age groups, the under 30s and over 75s, have an inflation rate which is higher than the official rate.
These two age groups are suffering the highest rate of inflation at the moment but, importantly, for very different reasons. The over 75s have a higher than average rate of inflation due to the fact that gas and electricity price inflation remains elevated. Gas price inflation eased a touch from 5.9% to 5.6% and electricity price inflation fell from 6.9% to 6.7%. However, both remain elevated, and as the elderly allocate a higher proportion of their spending to these basic services, this continues to keep their inflation rate higher than the official level.
The under 30s are also facing an inflation rate of 1.7%, but, for this age group, it is driven by tuition fees which remain high. Education costs are up more than 10% from a year ago and this follows on from the significant hike in tuition fees in 2012, which continue to affect the figures today.
It is the 50-64 year old age group which, once again, faces the lowest rate of inflation, at 1.3%. This is the lowest rate faced by this age group since September 2009. The main source of its lower inflation rate is the same as last month, falling petrol price inflation. In fact, petrol prices were 6.6% lower in March than a year ago. This age group allocates almost 7% of its spending to fuel, more than any other age group, which means that its inflation rate is more sensitive to moves in the petrol price.
Spending Weights
|
Age Group |
Food |
Electricity |
Gas |
Petrol |
Clothing/ Footwear |
|
Under 30 |
9.2% |
2.1% |
1.8% |
4.9% |
5.2% |
|
30-49 Year Olds |
11.9% |
2.3% |
2.2% |
6.0% |
5.9% |
|
50-64 Year Olds |
12.4% |
2.5% |
2.5% |
6.6% |
6.1% |
|
65-74 Year Olds |
14.2% |
2.9% |
2.9% |
5.7% |
4.5% |
|
75 and Over |
16.4% |
4.0% |
4.0% |
3.8% |
4.0 % |
Note: This table shows the spending patterns of different age groups across different spending categories – source: The Family Spending Survey: 2013 edition and In-house Analysis
Linsey Thomson, Senior Economic Analyst, said:
“Our study shows that it is the over 75s and under 30s who are suffering the highest rates of inflation at the moment. But, importantly, their inflation rates are being driven by very different factors are the moment. Continued high levels of gas and electricity price inflation are keeping the over 75s inflation rate elevated, while it is tuition fees which are keeping the inflation rate of the under 30s high.
“The inflation rates for both of these age groups remain above the official rate and this highlights how spending patterns greatly affect rates of inflation. At the moment gas and electricity prices, together with education costs, are pushing inflation rates up, but falling petrol prices are pulling inflation rates lower.
“Our research highlights that it is difficult to apply a generic rate of inflation to all age groups and that small changes in specific categories of goods and services can greatly affect the inflation rate faced by different age groups. Currently, it is the under 30s and over 75s who face the highest rates of inflation, but for very different reasons”.
|
Age Group |
Inflation Rate |
|
Under 30 |
1.7% |
|
30-49 Year Olds |
1.4% |
|
50-64 Year Olds |
1.3% |
|
65-74 Year Olds |
1.4% |
|
75 and Over |
1.7% |
Alliance Trust’s full latest report on ‘Inflation and Age’ is available on www.alliancetrust.co.uk
