Negative RPI 'unlikely to ease pensioner inflation'

The Retail Prices Index (RPI) fell by 1.4% over the past twelve months, and a Government guarantee against negative inflation means the state pension will rise by 2.5% in April, but Watson Wyatt says pensioners will still feel a squeeze on their income in 2010. Average pensioner spending patterns suggest the elderly have faced a rise in costs of around 2.5% over the past eight months, and with VAT returning to 17.5% next year, retired people could see a fall in real-terms income. John Ball, head of defined benefit pension consulting at Watson Wyatt, says: "At first sight it looks like...