This month & #39;s official inflation report showed that the headline rate of inflation was unchanged at 2.8%.
Alliance Trust & #39;s monthly study of inflation rates affecting different age groups finds that it is still the over 75s who face the highest rate of inflation at 3.1%, although it is down slightly from 3.2% last month.
This small decline is related to the fact that food price inflation slowed, helping to offset higher gas and electricity price inflation. The under 30s are also experiencing a relatively high rate of inflation, at 2.9%, a slight increase from February.
The elevated rate of inflation experienced by the elderly is partly due to continued increases in electricity and gas prices. Electricity price inflation increased from 6.4% to 7.6% last month and gas price inflation rose from 7.2% to 7.6%.
Increases in these categories disproportionately affect the elderly as they allocate a higher proportion of spending to these areas. Food price inflation eased to 3.8% in March which helped to offset some of the impact from higher utility prices.
In March, the youngest age group, the under 30s, saw a rise in the rate of inflation they face, from 2.8% to 2.9%. The sharp increase in university tuition fees last autumn continues to put upward pressure on the inflation rate of this age group.
On top of this, inflation in the recreation and culture category rose from 1.2% to 1.8% in March. In particular, price moves in audio-visual equipment were less deflationary in March and this is an area where the youngest age group allocate a higher proportion of spending than compared with the elderly.
Shona Dobbie, Chief Economist, said: & quot;Our analysis shows that the over 75s continue to suffer the highest rate of inflation. The oldest households spend relatively more of their budget on basic goods and services, which have pushed their inflation rate higher in recent months.
& quot;We estimate that the oldest age group spends more than 23% of their budgets on food, gas and electricity, compared with just 16% in the case of 30-49 year olds. The under 30s spend an even lower share on food and utilities, but are more affected by education and audio visual costs and therefore face a relatively higher rate of inflation.
& quot;In addition to the large increase in education costs last autumn, inflationary pressures are currently high on tobacco, transport services and gas and electricity, adding to the financial burden facing almost all households. However, the middle age groups - the 30-49 year olds, the 50-64 year olds and the 65-74 year olds - are all currently benefiting from the fact that clothing and footwear prices are lower than a year ago, and that petrol prices have not & nbsp; changed substantially over the same period.
& quot;For this reason, we estimate that these age groups are all currently experiencing a rate of inflation of close to 2.4% to 2.6%, which is lower than the official headline rate of 2.8%. & quot;
Have your say on this story using the comment section below
Article courtesy of Investor Today | Sign up for Investor Today newsletter | Get this news on YOUR site!