Rising house costs over the last 10 years has seen inflation for pensioners rise by 34%, claims Clerical Medical.
In the third part of its pensions report, the insurer says in the last year alone inflation on goods and services bought by pensioners rose by 3.9%, with housing costs accounting for the almost half the rise, having seen increases of 73% over the last decade.
The main driving force behind the increase in housing costs, and therefore inflation, have been council tax and repairs and maintenance, with housing acting as the largest single expense facing pensioners.
According to Clerical Medical, on average 25% of a pensioner’s expenditure - around £55.79 a week - is spent on housing, which is exactly the same proportion as that spent by all households.
Using data from the Office of National Statistics (ONS), Clerical Medical has found other items which have seen a significant rise in inflation since 1996 include alcoholic drinks and tobacco, which has grown by 42%, while recreation and culture costs have increased by 35%.
But while personal goods and services has increased in cost by 28%, clothing and footwear is the only one of the eight main categories of expenditure which has fallen, with a drop of 21% over the last decade.
In addition, Clerical Medical analysed the spending patterns of pensioners, to reveal they spend a larger percentage of their weekly budget, 15% or £32.78 a week, on food compared to all other households which only spend around 10%.
Pensioners also tend to spend more than other households on personal goods and services, such as jewellery, toiletries and medicines, at £23.36 a week, although they spend less on transport, at 10% of their weekly budget, and manage to spend less than £10 a week on clothes and footwear.
However while pensioners have limited resources, they seem to be changing their priorities as to what is most important, with recreation and culture rising from 18% in 1999/00 to 22% in 2004/05.
As a result, the report says pensioners are cutting back in other areas such as food which has dropped from £35.96 a week in 1999/00 to £32.78 in 2004/05, while household goods and services has also fallen from a 15% share of the budget in 1999/00 to just 11% in 2004/05.
Tim Crawford, group economist of Clerical Medical, says: “Pensioners have faced a one-third rise in the average cost of living over the past decade. Higher housing costs have been the key factor in driving up living expenses for pensioners with these costs accounting for almost a quarter of the average pensioner’s total spending.”
10 years of Inflation by category of expenditure
|Category||Growth in Prices|
|Food & non alcoholic Drinks||20%|
|Alcoholic Drinks, Tobacco||42%|
|Clothing & footwear||-21%|
|Housing (net), fuel & power, other (inc. fines, bank charges, gifts & holiday spending)||73%|
|Hhld Goods & services (inc. communication)||17%|
|Personal Goods & services (inc. Health)||28%|
|Recreation & culture (inc. Education, Restaurants & hotels)||35%|
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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