Inflation hits pensioners most

Living costs are increasing at 5.1 percent a year for those over 64, even though the headline rate of inflation has fallen to 4.2 percent.

This is because older people tend to spend most of their money on food, which have seen the bulk of the price rises. 'Prices may have fallen in games consoles and electrical goods but the essential items that pensioners buy – namely heating and food – are still being severely affected by inflation levels, control of which continues to be in short supply,' said Saga's Ros Altmann.

Living on fixed incomes, pensioners are hit badly by rising food prices, such as the 10 percent rise in bread from last year, or the 16 percent rise in fats and oils. Energy bills too continue to rise, with British Gas announcing an 18 percent hike in their prices just last week.

'Month after month, this country’s savers witness the value of their hard-earned savings whittled away by inflation,” said Dr Altmann. 'The fall in inflation is clearly positive but this appears to be more through luck than judgement and there is still a long way to go.

'The Bank should take a long hard look at the dangerous impact this double whammy of high inflation and low interest rates is having on the UK economy, rather than exclusively focusing on the presumed benefits of keeping rock bottom rates unchanged,' she added.

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