Inflation: Elderly are hardest hit victims and it's set to soar higher in coming months

By Becky Barrow

Last updated at 10:48 AM on 14th June 2011

A recent report found that more than 60 per cent of people over the age of 50 said their lifestyle had 'crashed' over the past year

Pensioners are being crippled by a higher rate of inflation, a report warns today.

A typical OAP is battling an annual rise in the cost of living of 4.6 per cent – 0.1 percentage point above the Consumer Price Index.

Last night experts said this would rise even further over the next few months because of hikes in gas and electricity prices.

This compares to a ‘real’ inflation rate of just 2.9 per cent a year for the young, or an average for all age groups of 3.5 per cent.

The figures are contained in an analysis of annual inflation over the past three years by the Institute for Fiscal Studies.

Figures published today by the Office for National Statistics will show inflation remains substantially above the Government’s target of 2 per cent.

The IFS said pensioners were hit harder by many of the bills that are rising, but feeling none of the benefits of bills which are falling.

For example, pensioners are badly hit by rising fuel bills, which have doubled in a decade. The average ‘dual fuel’ bill has rocketed to £1,162 a year, forcing many to cut back on their heating because they simply cannot afford to stay warm.

But few pensioners benefit from the fact that mortgage costs have plummeted over the past few years, because the majority have paid off their mortgage.

Dr Ros Altmann, director general of Saga, the old age specialists, said the plight of the elderly was ‘an outrage’.

Many pensioners were struggling to survive on a fixed income while their bills soared.

Dr Altmann added: ‘It is so damaging for someone on fixed incomes when prices rise at this rate. Every year, they can afford to buy less and less.’

A recent Saga report found that more than 60 per cent of people over the age of 50 said their lifestyle had ‘crashed’ over the past year. It warned their lifestyle was being crippled by the toxic combination of the high cost of living, record petrol prices, tax hikes and poor pay rises.

Dr Altmann predicts that inflation for pensioners will rise to 6 per cent within months.

She blamed the controversial decision by Scottish Power last week to raise its energy prices by up to 19 per cent, adding almost £200 to annual household bills – a move almost guaranteed to be followed by its rivals.

Michelle Mitchell, of Age UK, said: ‘The threat of higher energy bills is likely to add to the worry and uncertainty faced by millions of older people during the winter months.’ 

Neil Duncan-Jordan, from the National Pensioners’ Convention, said: ‘Millions of pensioners feel betrayed by this  Government so far.

‘Many are struggling every day to pay their bills.’

They are facing a ‘triple whammy’ of a measly State pension, dire interest rates on their savings and the loss of their winter fuel payment ‘top-up’, he said.

The situation is made worse by the fact that the State pension is one of the meanest in the developed world.

A full basic State pension is worth just £102.15 a week, and many are not even eligible for the full amount.