Last updated 05:39, Friday, 17 October 2008

Pensioners suffer more from soaring inflation than their working counterparts, research has found. A study by the Institute for Fiscal Studies found the average pensioner experienced a 7.4 per cent rise in the cost of living during 2008, while non-pensioner’s outgoings increased by 5.4 per cent

Out in the cold: Pensioners over the age of 80, and who live in the poorest third of the UK’s households, experienced a nine per cent rise in their living costs – nearly double that of the average British consumer

Older, poorer pensioners were found to be even more affected by the rising costs of goods, food and fuel.

Pensioners over the age of 80, and who live in the poorest third of the UK’s households, experienced a nine per cent rise in their living costs – nearly double that of the average British consumer – while men living alone saw their expenditure leap by eight per cent.

The research was based on the Retail Price Index (RPI), which measures the cost of an average basket of goods and services, and data from the Expenditure and Food survey from the past 30 years.

Researchers calculated the inflation levels for different households, and compared it to the national average.

The disparity was down to food and fuel making up a larger proportion of the average pensioner’s shopping basket, they said.

In the year to August, world agricultural prices rose 40 per cent, oil prices went up by 60 per cent and wholesale gas prices by 90 per cent. The rise has driven inflation in the UK to over four per cent.

On average, food makes up 17 per cent of pensioners’ budgets – five per cent more than non-pensioners, and household fuel seven per cent – three per cent more than non-pensioners.

“The oldest and poorest pensioners in particular currently find themselves hardest hit by inflation, as food and fuel make up a much bigger part of their spending than for non-pensioners,” said report author Andrew Leicester.

“For these households, increases in the state pension and even of pension credit may not fully compensate them on average for inflation at present.”

Campaigners said the findings showed the basic state pension was inadequate in the face of the rapid rise of the cost of living, despite being linked to the RPI.

Researchers found the basic state pension had risen by less than the average pension inflation every year since 2006.

Help the Aged, who funded the research, said pensioners were “watching their quality of life disappear before their very eyes”.

“With prices for essential items going up and up, many older people are forced to cut back further and further,” said Louise Ward-Bergeman, policy officer at Help the Aged.

“Pensioners living on low fixed incomes with little hope of pulling themselves out of financial difficulty are even more likely to feel the pinch.

“Two-and-a-half million pensioners already live in poverty and 1.4 million live in deep poverty.

“It’s high time the Government took the bull by the horns and ensured older people get all the benefits they’re entitled to.”

A Department for Work and Pensions spokesman said: “We understand that pensioners are facing challenges with rising food and fuel costs.

“That’s why we’re spending £575m increasing winter fuel payments and making it simpler for pensioners to get the help they’re entitled to.

“Our reforms to the state pension make it fairer and more generous.”