How does inflation affect you?

The inflation rate in the UK fell to 4.2 percent in December from 4.8 percent. That’s the rate of Consumer Prices Index (CPI) as used by the Government for the main measure of inflation. That sounds like good news, but there are some things in the measure of inflation that won’t really affect the older generation. Let’s have a look at some of those categories.

Food and Non-alcoholic drinks

The overall inflation rate in this category is 3.8 percent. Breaking it down further, the bad news is that staple hot drinks like coffee, tea and cocoa are running at 9.6 percent inflation, but the good news is that fruit (which is healthy as well) has an inflation rate of 0.5 percent. Other examples in this category are fish with an inflation rate of 6.4 percent and bread and cereals with 3.1 percent inflation.

Alcohol and Tobacco

This is the category with the highest inflation rate at 9 percent, but if you are looking for a silver lining to this cloud, then it is that these are unhealthy lifestyle choices and cutting down on them would help your health as well as your bank balance. Tobacco has an inflation rate of 11.8 percent, spirits 8.4 percent, beer 5 percent and wine 4.1 percent.

Housing and Services

This is a category which cannot be avoided. It includes electricity, gas and materials for maintenance and repair. Its overall inflation rate is 7.9 percent, but, as we’re all aware, gas and electricity prices can rise steeply with little notice. Although gas prices might be on the way down right now, recent inflation has been 19.8 percent, and it’s 14.1 percent for electricity and 7.2 percent of maintenance and repair materials.

Transport

Overall inflation in the transport category is 5.8 percent. You might be beyond the stage where you like investing in new cars, which are running at 3.1 percent inflation, but it’s good news if you buy second-hand cars, which are coming down in price at 2.7 percent. Fuel is, of course, still expensive and recent mini falls cannot mask its annual inflation rate of 9.4 percent. If you travel by rail, you cannot escape increasing costs as ticket prices have gone up 6.7 percent in the last year.

Communication

This category has an overall inflation rate of 6.6 percent, with telephone services and equipment up by 6.2 percent. The use of postal services may be on the wane, but the over-50 age group still likes to exchange letters. It’s disappointing, therefore, that postal services are suffering from 10.5 percent inflation.

Recreation and Culture

This one area where inflation is going down. Its overall rate here is -0.7 percent. Games, toys and hobbies have seen a decrease of 3.5 percent in the last year, and books have gone down by 2.2 percent. Unfortunately, on area of comfort for older people – pets – has seen an increase of 5.3% within this category.

Restaurants and Hotels

The overall inflation rate in this category is 4.4 percent, just above the overall CPI rate. Accommodation prices have only risen by 1.8 percent, with canteen prices up by 4.7 percent. Sadly, restaurants and cafes – popular with the over-50s – have seen a rise of 4.9 percent in the last year.

Comment

The effects of inflation are not the same for any two people as we all have different lifestyles. It is difficult to tell whether over-50s suffer more than those who are under 50. It is also not easy to pick and choose what you do based on inflation rates – life doesn’t work like that – but some knowledge is always useful.

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