The 10-to-15% fall in the value of the pound since the Brexit referendum has been one cause of the rise in prices in the months since. In June 2016, price inflation was at 0.5%. The most recent figures reported price inflation to be 2.9%.
The headline inflation figure is an average figure, weighted across a basket of 700 goods and services. Everyone’s personal inflation experience will be different as no one will buy the same balance of goods as that used to calculate the headline average.
Our own analysis of shopping habits has identified how price inflation by age has differed over recent times – and it is older shoppers who have been hit hardest.
All ages have experienced a rise in inflation since July 2016, but consumers aged 75 and over have seen their inflation rise more than seven-fold – a greater multiple than in any other age group. The second hardest hit has been those aged 65 to 74, rising nearly five-fold (up to and including July 2017). This comes after a long period of virtually no price rises for those in and approaching retirement.
Older consumers traditionally spend a greater proportion of their money on food, and have disproportionately benefitted from falls in food prices over recent years. These price falls have recently come to an end as the fall in the value of the pound has pushed up import prices. In the July 2017 figures, the price of food increased by 2.9% - greater than the headline inflation figure of 2.6%. This included significant price rises for fruit (+3.6%), bread & cereals (+3.7%), oils & fats (+5.1%) and fish (+7.4%).
With fixed incomes, the challenges of managing price rises are arguably greater for those in retirement. The continuation of the State Pension triple lock through this Parliament will provide some comfort, but the need to carefully manage every pound is probably greater today than it has been for a number of years.
Here’s our free online budget planner to help you manage your monthly income and expenditure.
 Source: http://www.bbc.co.uk/news/business-41238822
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