One of the main problems with measuring inflation is that everybody spends their money differently and so has their own personal level. So whilst the Office of National Statistics (ONS) may report is at 3%, this is simply an average for the whole population and may not be an accurate measure of the rate of inflation experienced by any individual or section of society.
In recognition of the fact that as people get older their spending habits change, Age UK Enterprises have commissioned the production of the Silver RPI.
Using the same data and similar methodology to that used by the ONS for its headline Retail Price Index (RPI) calculation, the Silver RPI is adjusted for the spending habits of different age groups. They give the example of electricity, where the over 75’s spend double the amount of those in the 55-59 age group.
Age UK Enterprises has published the data below to show how much greater inflation for the over 55’s was compared to the published RPI along with an estimate of the annual impact of inflation on each ages groups actual spending.
The table shows that since 2008 those in the 55-59 age group have experienced inflation of 1.8% greater than the ONS headline RPI rate and that the overall effect if inflation was to increase their cost of living by £500 a year. Whilst the over 75’s are even worse off, experiencing inflation 4.1% over the headline rate, however because their overall level of spending ends to be less this cost them £440 a year.
|Sliver RPI compared to headline RPI since 2008|
|Age band||Percentage difference between the Silver RPI and headline RPI||Estimated Cost/year of the full impact of inflation|
Their aim is to publish the Sliver RPI quarterly to coincide with the Bank of England’s Quarterly Inflation Report.