Inflation, and therefore the cost of living, fell to 1.6% during March, according to official figures, but can these headline rates be applied to everyone universally?
It may have beaten the Bank of Bank of England's 2% target for the past three months, and be offering a welcome respite for savers, but not everyone can breathe such a deep sigh of relief with many age groups experiencing very different levels of inflation.
The good news is that all ages groups saw a decline in their inflation rates over the past month but, according to research from Alliance Trust, the under 30s and the over 75s are actually suffering rates of inflation above the Government's official statistic, at 1.7%.
These age groups might be alike in the fact they are both experiencing the highest levels of inflation at the moment, but research reveals it is for completely different reasons.
For the older age group it is the hikes in gas and electricity prices that are affecting them. As the over 75s spend a higher proportion of their income on these utilities – around 8% in total – they are being hit hardest by the high costs associated with these services. Although gas price inflation eased slightly from 5.9% to 5.6% and electricity fell from 6.9% to 6.7%, inflation is still extremely high and consumers, especially those who may be on a tight pensioner's budget, will find it difficult to manage the costly bills.
That's why it is so important for people to ensure they are on the very best tariff available to them. Take a bit of time out to compare energy prices and consider switching if you find a better deal.
When it comes to the under-30s, inflation is persistently high, but this time it is not paying the energy bills that's affecting them - instead it's the costs of tuition. Still reeling from the significant hike in education costs seen in 2012 they have again experienced inflation, with outlay for learning up more than 10% on a year ago.
Happily for 50 – 64 year olds, they are experiencing the lowest rate of inflation encountered by this age group for five years, at just 1.3%. With this group allocating almost 7% of its spending to fuel - more than any other age - this could be one significant reason for the low inflation figures as prices on the forecourts have been falling and petrol price inflation is actually 6.6% lower than a year ago
Linsey Thomson, Senior Economic Analyst, said: "Our research highlights that it is difficult to apply a generic rate of inflation to all age groups and that small changes in specific categories of goods and services can greatly affect the inflation rate faced by different age groups. Currently, it is the under 30s and over 75s who face the highest rates of inflation, but for very different reasons".
In slightly better news for workers, however, wages are rising faster than inflation for the first time in nearly six years. According to the Office for National Statistics weekly wages, including bonuses, have risen by 1.7% in the year to February, meaning workers should be feeling just that bit better off, however, when bonuses are excluded from these figures, wages have only increased 1.4%, still below the rate of inflation. If you feel that the cost of living hasn't fallen accordingly for you, what can you do about it? Firstly, putting something away for life's little emergencies is always a sensible option, but it's not as clear-cut as that. You will want to make sure your investment is not being eaten away by inflation. A basic rate taxpayer will currently need to find a savings account paying 2.00% yearly, while a higher rate taxpayer will need one paying 2.66%, and you will need to consider locking your money away to get these rates. ISAs, however, offer the advantage of tax-free interest, so regardless of your tax band, you will need to find an account paying 1.6%.
As we mentioned above, always search out the best deals when it comes to utilities, but remember this includes not only energy tariffs, but also broadband deals, mobile phone tariffs and the like.
And if you do want to treat yourself or your family, then consider taking a look at the latest money-off vouchers and deals so you can enjoy a few luxuries without it breaking the bank.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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