Retired and non-retired households have experienced similar inflation rates since April 2021, with both at 5.4 per cent in December 2021, according to ONS data.
The ONS has released ‘preliminary and experimental subgroup estimates’ of inflation rates experienced by various types of households from 2005 to 2021 and found that retired and non-retired households have experienced similar inflation rates since April 2021.
The report, which aims to compare inflation experienced by retired and non-retired households, as well as low and high-income households, found that transportation costs are the main driver of recent inflation rates in both groups.
According to the research, housing costs is the second-highest driver of inflation in both groups, but they drive the inflation rate of retired households more than non-retired households. Other areas where retired households contributed more to inflation than non-retired households include recreation and culture, food and non-alcoholic beverages, furniture and household goods, and health.
Aegon pensions director Steven Cameron says: “We welcome this new ONS data around the inflation experienced by different types of households. At a time when inflation is at a three-decade high, and as we face a major cost of living crisis, it’s important to understand the eroding impact of inflation on people’s purchasing power as accurately as possible. Different types of households have different spending patterns and as a result, face different rates of ‘personal’ inflation. Those on low or fixed incomes have particular difficulties when faced with rocketing inflation. They are likely to spend more on essential items which may be rising at a different rate than more ‘discretionary’ purchases which typically take up a higher proportion of spending by higher-income households.
“One ‘at risk’ group is the pensioner population, particularly those heavily reliant on the state pension. The Government takes into account inflation as part of the ‘triple lock’ when setting the yearly level of state pension. It’s important to have insights into the rate of inflation being experienced by retired households, particularly if this were higher than that of the population as a whole.
“We support ONS plans to further refine its methodologies, and would particularly welcome data looking specifically at inflation on a basket of goods and services representative of spending patterns of lower-income pensioners.”