Nearly one in three households, or eight million people, are seeing their cost of living fall as mortgage bills drop following the cut in base interest rates. This is an increase from just 2 per cent in September last year. Research by the Institute of Fiscal Studies has found however, that there are stark differences among social groups – the biggest drop in the cost of living (3.6 per cent on average) is among the richest fifth of people under 35; whereas millions of others, the elderly in particular are struggling to make ends meet, as they are hit with an annual inflation rate of up to 7 per cent as food and energy costs remain high.
Age Concern has calculated that the rate of ‘pensioner inflation’ is, on average, 10 times higher for pensioners than non-pensioners. A total of 2.5 million pensioners live in poverty before housing costs, and 1.4 million pensioners live in ‘deep’ poverty before housing costs. Age Concern said even the 5 per cent increase in the value of pensions due in April won’t be enough to keep up with inflation increase for the over-70s.