The inflation experienced by those in later life is getting closer to that experienced by the general population but rising costs continue to be an issue. This means it is more important than ever for consumers to get the best value for money.
London (PRWEB UK) 17 May 2011
Latest findings of the Silver RPI published by Age UK Enterprises, the commercial services arm of charity Age UK, show that since 2008 the extra increase in prices measured by the Silver RPI, relative to the Headline RPI, is now costing the average over 55 year old an additional £918(1) per year. This amount rises for some older age groups, with an average 65-69 year old facing additional costs each year of £1,054(2) since 2008.
In the first quarter of 2011, the increase in prices measured by the Silver RPI was broadly similar to that implied by the Headline RPI. Between January – March 2011, over 55s on average experienced inflation at 0.03 percent below Headline RPI, in cost terms suggesting they are £2.63 a year better off. This changes with age with a typical over 75 year old experiencing price rises at 0.2 percent less than Headline RPI suggesting they are £24.14(3) a year better off.
The smaller increase in prices experienced by a typical over 75 year old in the first quarter of 2011 can be attributed to the fact that they spend a greater share of their income on products that are either falling in price, or rising only modestly. For example, over 75s spend a great proportion of their income on food than the population at large, and food prices fell by 1.0 percent(4) in March 2011.
Commenting on the findings, Gordon Morris, Managing Director, Age UK Enterprises said: “The latest Silver RPI findings show that the gap between Headline and Silver RPI has narrowed in the first quarter of this year, but these findings must be seen against a context of the past three years. In this time, those in later life have consistently experienced price rises at a higher rate than the general population or predicted by official measures. At an age when a significant number of long-term financial decisions are being made, being able to accurately track the cost rises experienced by those over 55 is crucial.”
The gap between inflation experienced by the general population and those in later life since 2008 is in part due to the continued impact of a low interest rate environment, which has kept mortgage payments lower for many homeowners. Those in later life are less likely to carry significant mortgage debt and therefore do not benefit from the savings that lower mortgage rates offer.
Increases in petrol costs remain a significant burden on over 55s. The average 60-64 year old, for example, is now estimated to spend £136(6) more each year on petrol than in 2010. At the same time, expenditure on ‘luxury’ items has decreased. For example, annual spending on foreign holidays by those aged 60-64 has decreased by £148(7) and for those aged over 75 it has decreased by £136 a year.
Gordon Morris continued: “The inflation experienced by those in later life is getting closer to that experienced by the general population but rising costs continue to be an issue. This means it is more important than ever for consumers to get the best value for money. To help, this month Age UK launched ‘Let’s Talk Money’, a campaign aimed at reducing and preventing poverty, as well as helping consumers maximise their income.”
Erik Britton from Fathom Consulting said: “The Silver RPI offers people over the age of 55 an opportunity to forecast their financial future more accurately. When people plan for retirement, they need to form a view on how much money they will need to get by from one year to the next. In order to do this accurately, it is important that they have access to reliable information on changes to the cost of living for people in their own age group, rather than the population as a whole.”
Age UK Enterprises has developed the ‘Making Your Money Go Further’ booklet, which is packed with information about the products Age UK has that could help, hints and tips when shopping around as well as the dos and don’ts of purchasing products such as annuities, insurance and utilities. To request a free copy of this booklet, pop into your local trading Age UK or call 0800 345 7113.
The Silver RPI is published in full on Monday 9 May and available as a PDF report to download from http://www.ageuk.org.uk/silver-rpi
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For more information or to speak to a spokesperson contact Anouchka Burton, Andy Martinus or Rhys Phillips on 020 7360 7877 or ageuk(at)teamspiritpr(dot)com
(1)/(2)/(3) The additional costs faced by older consumers is derived by first calculating the difference between the inflation rates experienced by each Silver RPI age band, and the inflation rate experienced by the population as a whole. This difference is then multiplied by average weekly expenditure on the RPI basket by each Silver RPI age band in the base period. Finally, this figure is multiplied by 52 to given an annual equivalent amount. Over the twelve months to March 2011, Headline RPI inflation was 5.3% (ONS: April 2011)
(4) Source, ONS ‘Focus on Consumer Prices’, March 2011.
(6)/(7) The actual change in expenditure is based on RPI weights that are updated every February by the ONS. This shows how different age groups have varied their expenditure on different items over the past 12 months.
NOTES TO EDITORS
About the Silver RPI
The Silver RPI was developed by Age UK Enterprises in partnership with former Bank of England inflation specialists, Fathom Consulting, and is the most complete measure of cost increases in later life. It uses information from the Living Costs and Food Survey (LCF) to re-weight the 78 items that make up the official RPI and better reflect the expenditure patterns of over 55s. The measure is the first to consider inflation at five year age bands above 55 years of age and unlike existing ONS pensioner measures it includes all housing costs and households at all income bands. The Silver RPI was first launched in November 2010 and is updated quarterly, with the methodology adjusted for the February report to include more up to date information on expenditure patterns. To reflect this, the weight attached to utility bills was increased, and consequently an increased estimate of the total price rises experienced by those in later life since January 2008.
About Erik Britton, Director at Fathom Consulting:
Erik Britton joined Fathom as a director in October 2007. He has 18 years of experience as a professional economist and was formerly a director at Oxford Economics. Prior to Oxford Economics, Erik was involved in economic modelling and forecasting, first at a London-based consultancy called MMD, and then at the Bank of England. At the Bank of England, Erik spent five years in the Monetary Analysis Division where he ran the Bank's UK macroeconomic model, co-ordinated its international forecast, and also managed a team of economists responsible for analysing the economics of the corporate sector.
About Fathom Consulting:
Fathom Consulting is an independent consultancy which combines macroeconomic analysis together with financial market research. Fathom’s team of economists combine a high degree of technical expertise with many years of practical experience in policy‐making and financial institutions. Their combined experience of analysing both the global economy, the UK and the Bank of England in particular, is unrivalled by any other private sector institution in the UK.
ABOUT AGE UK
Age UK is the new force combining Age Concern and Help the Aged. The Age UK family includes Age Scotland, Age Cymru, Age NI and Age Concern Enterprises – the trading arm of Age UK.
Age UK, a charitable company limited by guarantee and registered in England: registered office address 207-221 Pentonville Road, London N1 9UZ, company number 6825798, registered charity number 1128267.
AGE UK ENTERPRISES
To fund its charitable activities, Age UK needs a constant flow of independent income. It seeks to achieve this through a balance of traditional fund raising and trading activities.
The trading activities, through Age UK Enterprises, enable it to meet the needs of older people, through products specifically designed to meet these needs; quality products such as general insurance and energy Services. Age UK Enterprises is the commercial services arm of Age UK.
Age UK Enterprises incorporates: Age UK Energy, Insurance Services (car, home, travel and motor breakdown) and Age UK Guaranteed Funeral Plans. Log on to http://www.ageuk.org.uk/buy for details.
Age UK Motor Insurance is now proudly on Which? Magazine’s Recommended Providers List of car insurers. Which? Magazine analyse the whole UK car insurance market to find out which brands offer the best policies. Instead of picking Best Buys based on specific scenarios (that are only relevant in specific cases), the experts at Which? magazine focus on the quality of policies.
Age UK Enterprises is part of the Social Enterprise Coalition; an organisation that represents a wide range of social enterprises with the overarching aim of working in partnership for the creation of effective sector products, services and knowledge-sharing networks to help stimulate and encourage growth, development and sustainability of social enterprises in England.
Age UK Enterprises scooped up the ‘Customer Care Award’ at the prestigious 2010 British Insurance Awards. The judges singled out Age UK Enterprises for its exceptional customer service which is provided by Ageas Insurance Ltd (formerly Fortis Insurance Ltd), as well as for glowing customer testimonials with a ‘world-class’ customer satisfaction score of 85 per cent, and 89 per cent of customers saying that they would recommend Age UK Enterprises/Ageas Insurance Ltd.
Age UK Enterprises Limited is authorised and regulated by the Financial Services Authority for insurance mediation (311438). Age UK Enterprises Limited is registered in England and Wales No. 3156159, registered office: Astral House, 1268 London Road, London SW16 4ER. VAT Number: 710 3843 66. Age UK Enterprises Limited is a wholly owned subsidiary of Age UK (registered charity No. 1128267 and registered company No. 06825798) and donates its net profits to Age UK.
Age UK Enterprises is based at 4th floor, 207 – 221, Pentonville Road, London, N1 9UZ.
About Let’s Talk Money
Age UK is the new force combining Age Concern and Help the Aged, working to improve later life by providing enhanced services and support.
Our research has shown that people over the age of 55 suffer the effects of inflation much more than younger generations. We created a Silver Retail Price Index (Silver RPI) to better understand what was happening and it showed that official measures consistently underestimate how price rises impact those in later life. The Silver RPI makes clear that financial service providers need to create products and services specifically for those in later life because a ‘one size fits all’ approach doesn’t work.
We offer a range of products which have been designed to satisfy our aim of providing products that offer value for money through Age UK Enterprises. This is the commercial services arm of Age UK and has 27 years experience and over one million customers. They do not exist to make a profit and where a surplus is made, it is gift aided back to the Age UK charity.
We also understand the importance of choice – especially when purchasing important products. Recognising that one purchasing channel may not suit everyone, we offer a number of different ways to people who want to buy with us.
- face-to-face - through our UK wide network made up of 134 trading alliance members, 262 sales offices and 466 individual arrangers/supervisors
- telephone - with award winning UK call centres
- online – at http://www.ageuk.org.uk/products
Know your consumer rights
When it comes to buying goods or services we have more choices than ever. We can pop down to our local high street; buy over the phone or over the internet. Most of the time things go smoothly and we end up with the things we wanted.
But sometimes things can go wrong. To avoid problems we recommend the following:
Check prices and small print – and keep receipts and documents safe.
Do not sign anything unless you completely understand the document..
Shop around to compare the price and standard of service
Take care when buying from doorstep sellers – take time to think it over, check prices and decide whether you really need the product.
Keep a note of the seller's name, address and telephone number so you can contact them if any problems arise.
To find out more, read our free guide - Your Consumer Rights.
If you want to find out more information all the guides and factsheets listed here are available by ringing Age UK Advice free on 0800 169 65 65 or by visiting http://www.ageuk.org.uk/moneymatters
Buying power, our tips for smart shopping
Shopping around is crucial for people who want to manage their finances. Before you buy, you should ask yourself three questions:
Is this right for me?
Spend time reviewing your needs. Once you know exactly what you need, invest time in using the internet and newspapers to investigate the different products available. Don’t forget to include the specialist providers who cater for a certain groups, such as those in later life. Some companies claim to offer products for the over 50s, but are they really offering anything different?
How do I want to buy?
Once you have decided which product is appropriate for you, review the range of options as to how you could buy it. You may find that paying in one go or by direct debit is cheaper. Is there a charge for buying by monthly instalments? Some companies also offer a discount for buying online. Other people may like the reassurance of dealing someone to someone face to face.
Is the cheapest the best?
Be careful before buying a product that seems the cheapest. Cheaper products may not necessarily provide the best value over the long term. This is because the price may change rapidly or it may not give the level of benefits you need. Ways in which providers can justify bargain prices is by over inflating excesses making it futile for many to claim; charging premium rates on phone numbers or providing customer service which is below the standards you would expect.