Inflation - why it isn`t the same for everyone

By Matthew Plant

Today, inflation stands at 4%, but that doesn`t mean everyone`s living costs are going up at the same rate.

Someone who spends more of their income on high-tech equipment, for example, is likely to benefit far more from the simple fact that technology tends to get cheaper as time goes on.

But someone whose income largely goes on things like petrol or heating bills will be `feeling the pinch` more than others as those essential costs keep on rising.

Making things more complicated, the CPI (Consumer Prices Index) measure of inflation isn`t the only one that`s used, although it is the rate that we hear about more often - and that the Bank of England`s Monetary Policy Committee takes into account when it`s setting the base rate.

There`s also the RPI (Retail Prices Index), which takes other things into account, like buildings insurance, mortgage interest payments and Council Tax. Then there`s the RPIX (which is the same as RPI, but excludes mortgage interest payments). This graph shows how much they can vary.

Official inflation figures



Source: Office for National Statistics

Thanks to age UK, a charity which `works to improve later life for everyone by providing life-enhancing services and vital support`, we can also see how inflation affects older people - a rate dubbed the `Silver RPI`.

Recent research published by Age UK Enterprises reveals that the average person over 55 years old has seen their costs of living rise by a full 15.4% since January 2008 - 4.58% higher than the `standard` RPI figure of 10.82%. That translates to an extra cost of £918.01 per year.

The press release explains that one of the reasons for the difference is the `low interest rate environment` which means so many people are enjoying lower mortgage costs these days. People in later life are less likely to be carrying `significant mortgage debt`, so they`ve simply not benefited from that.

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Tags: inflation, same, CPI, RPI, RPIX, stats, statistics, inflation statistics

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