The main areas responsible for this hike in inflation rate are fuel and food, which, according to the weightings of the government’s pensioner’s price index, account for over one-third of all pensioners’ expenditure.
However, fuel and food prices will increase significantly in 2008 – with fuel up by around 15% and food up by 12%. This means that, even if all other items paid for by pensioners retain the predicted inflation rate of 3%, based on food and fuel hikes alone pensioners will fare the worst of all consumers, facing 7% inflation overall.
Official figures released in January showed that wholesale food prices rose by 7.4% in 2007 – more than three times the headline rate of inflation. This trend is predicted to continue into 2008. Recently it was announced that around 1.27 million pensioners are still working beyond the age they might traditionally have expected to be retired, as the rising costs of living in the UK prevents retirement.
Bob Mottershead, retail sales executive of Newcastle Building Society, said: These findings paint a bleak picture for pensioners in 2008. The rising cost of living is undoubtedly a concern for us all, however, commonly it is those in later years who suffer the most. For the many relying on the basic state pension of just GBP87.30 per week, these increases could negatively impact everyday quality of life.
