Inflation 'hitting pensioners hard'

A study by the Institute for Fiscal Studies and funded by Age Concern, found the average pensioner experienced a 7.4% rise in the cost of living during 2008, while non-pensioner's outgoings increased by 5.4%

Older, poorer pensioners were found to be even more affected by the rising costs of goods, food and fuel.

Pensioners over the age of 80 who live in the poorest third of the UK's households experienced a 9% rise in their living costs - nearly double that of the average consumer.

Age Concern Director General Gordon Lishman said the findings showed a need for immediate action. "Exceptional times call for exceptional measures and the Government must urgently respond to the needs of the millions of pensioners struggling to pay for the basics. An emergency package is needed to help those who cannot afford to wait for the good times to return."

The research was based on the Retail Price Index (RPI), which measures the cost of an average basket of goods and services, and data from the Expenditure and Food survey from the past 30 years.

Researchers calculated the inflation levels for different households and compared it to the national average. The disparity was down to food and fuel making up a larger proportion of the average pensioner's shopping basket, they said.

In the year to August world agricultural prices rose 40%, oil prices went up by 60% and wholesale gas prices by 90%. The rise has driven inflation in the UK to over 4%.

On average, food makes up 17% of pensioners' budgets - 5% more than non-pensioners, and household fuel 7% - 3% more than non-pensioners.

"The oldest and poorest pensioners in particular currently find themselves hardest hit by inflation, as food and fuel make up a much bigger part of their spending than for non-pensioners," said report author Andrew Leicester. For these households, increases in the state pension and even of pension credit may not fully compensate them on average for inflation at present."