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Inflation Rate for Pensioners Hits 9 Per Cent(permalink)

Posted by Bristol Older People's Forum on Wednesday, 17th January 2007 Last updated Tuesday, 5th February 2008
Pensioners groups expressed alarm at a claim that the inflation rate experienced by pensioners has reached 9 per cent - almost four times the figure for other people. The figure was produced by a research study commissioned by the Daily Telegraph.

It confirms what many people have believed for some time. The real rate of inflation depends on what you spend your money on, not on the theoretical retail prices index. And the things pensioners spend their money on have been going up in price much faster than most other goods and services. The official rate of inflation is 2.4%.

In fact, the Government produces its own pensioner price index, and this also shows that prices for pensioners are rising faster than at any other time in the last fifteen years, far outstripping the increases experienced by other consumers. The Government index shows that prices for pensioners rose by 5.1% in the third quarter of 2006, the highest figure since 1991.

It suggests pensioners have not benefited from cheaper goods such as electrical goods and clothes, which they are less likely to buy than other people. But they suffer disproportionately from increases in the prices of food, gas and electricity and council tax.

The state pension increases in line with general inflation. But because inflation for pensioners is much higher than that for the general population, pensioners are becoming worse off.

Age Concern has warned that financial pressure on pensioners will be intensified because the basic state pension will be worth £10 a week less than now in real terms by the time the Government fulfils its promise to restore the link with earnings in 2012.

Council tax has more that doubled over the last decade, while the state pension has increased by only 34%. Since 2002, the state pension has increased by just under 9%, but gas prices have shot up over half and electricity by a third.

The problems are exacerbated by the low take-up of state benefits available to pensioners with low incomes. About 2.2 million eligible pensioners do not claim council tax benefit. About 1.6 million eligible pensioners do not claim pension credit.

A recent Help the Aged study found that one in 20 pensioners had cut back on food to pay their council tax bills, and 8 % had been forced to turn off the heating.

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