Pensions on the rise

Even when high street prices are static, pensioners can be happy in the knowledge that the state pension is on the rise. A zero rate of inflation, means that prices haven't risen or fallen compared to a year ago, but in contrast, state pensions will rise by 5 per cent from April. This means that a single pensioner will get £95.25 a week. The reason behind this unexpected bonus is that annual increases are based on last September's inflation figures at a time when prices were rising significantly.

But whereas most people are benefiting from lower interest rates, this is not likely to affect those over a certain age who have tiny mortgage payments or none at all. Also, they may have savings which will have taken a battering during the recession. And food and fuel have both risen over the past year. Gordon Lishman, the director general of Age Concern said: "Falling headline inflation will do little to help older people's finances. The real rate of inflation for many pensioners remains far higher than the rest of the population. In addition, any income they relied on from savings has been completely blown away, leaving many more people just above the breadline."

The Institute of Fiscal Studies calculated in January that compared to a 0.5 per cent increase in the cost of living for younger people, pensioners’ cost of living was rising at 5.4 per cent a year so a £5 increase in the pension in April will not make too much difference.

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