Alliance Trust Reveals Inflation Fall Although Brits Still Under Pressure
Filed under: Features @ November 21st, 2008
Despite a decrease in inflationary pressures, a significant number of people are still set to struggle with their money management, it has been reported.
In a study carried out by the Alliance Trust Research Centre, it was revealed that the official rate of inflation fell to 4.5 per cent over the course of October. And while the firm stated that the actual increase in living costs that people face also declined during the month, many Britons are still said to be experiencing a surge in expenses that is some way above the headline figure. Indeed, it was indicated that the older a consumer is, the likelier it is that they will have to contend with higher living expenses. Although those above the age of 75 were shown to have seen the amount of inflation they are victim to fall 0.8 percentage points over the course of last month to stand at 7.1 per cent, Alliance Trust claimed that this is still some 58 per cent higher than the headline figure. Meanwhile, 65 to 74-year-olds and 50 to 64-year-olds are currently shown to be seeing living costs rise by 5.8 and five per cent respectively.
On the other hand, 30 to 49-year-olds and those under the age of 30 were shown to be privy to rates of inflation underneath the official figure. People in such age demographics are indicated to be experiencing inflation rates of 4.4 and 4.2 per cent respectively.
As an example of the rising money management difficulties that consumers may be facing, the firm revealed that gas prices have surged by over 50 per cent over the last 12 months, with the cost of electricity up by about 30 per cent. It was also stated that while food price inflation fell last month, costs are still 11 per cent above those recorded this time last year.
Such rises were said to have a particularly dramatic impact on older people, who tend to spend a greater proportion of their household budgets on these areas. Younger Britons, meanwhile, in addition to generally spending less money on utilities and food, were shown to put a large amount of expenditure on things such as clothing, audio-visual goods and footwear that are continuing to fall in price.
In facing an increase in day-to-day costs, it could be possible that consumers find they are developing problems in keeping up with other financial commitments in areas such as personal loans, credit and store cards and mortgage repayments.
Commenting on the report, Shona Dobbie, head of the Alliance Trust Research Centre, said: “While it is good to see headline inflation fall back sharply this month, we remain concerned about the high level of inflation which the older age groups still face. The rate of inflation facing the over-75s has been reduced, but only to 7.1 per cent, which is still 58 per cent higher than the official rate of inflation. This highlights the extent to which the elderly are suffering disproportionately from rising utility costs which have soared over the past year. The recent gas and electricity price hikes hit the elderly the hardest because they spend a higher proportion of their household budget on such services.”
She went on to report that high inflation rates in gas and electricity is of particular concern for older people as winter begins to set in, stating that higher utility and food prices “leave elderly households with less money to spend elsewhere”.
For those consumers who are concerned about their ability to manage their money over the coming months, applying for a debt consolidation loan could prove to be useful. By taking out this kind of loan, borrowers may be able to merge various spending commitments into a single low-cost monthly repayment. This may prove to be of particular assistance after the Motley Fool reported last month that 37 per cent of Britons claim to be willing to shell out as much as an additional 60 pounds each month on their gas and electricity in order to keep warm over the cold, winter months.
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