The news this week that price inflation, as measured by the Consumer Prices Index (CPI), has fallen to a four year low will come as little comfort for many older people.
CPI inflation fell to 2.1% for the year to November, from 2.2% the previous month.
This means inflation is nearing the government target of 2%, although recent energy price rises have yet to be factored into the calculation and are likely to push CPI higher in 2014.
CPI is an average measure of inflation which does a poor job of representing the actual price inflation experience for individuals. One group who typically experience much higher levels of price inflation are the elderly; in retirement we tend to consume goods and services which rise in price at a much faster rate.
Some new figures from the Labour Party confirm this, with elderly people paying almost £740 a year more for vital home care services under the coalition government. Liz Kendall MP, Labour’s shadow minister for care and older people, found that the average cost of home care services had risen by £50 a month since the general election.
Charges for meals on wheels have gone up by a fifth and community transport charges have almost doubled since 2010. These figures were based on an analysis of the charges levied by 118 local authorities.
Kendal commented:
“Under this government fewer elderly and disabled people are getting help with their care costs, and more people are being forced to pay more for vital services that help them get up and be washed, dressed and fed,
“These hikes in care charges are a stealth tax on some of the most vulnerable people in society, and vary widely across the country depending on where people live.
“Many elderly and disabled people, and families who want to help their loved ones, will really struggle to pay these charges when they are already facing a cost of living crisis.”
According to Labour, the price increase mean the average yearly cost for an elderly person who pays for ten hours of home care and receives five meals on wheels a week has increased by £740 a year since 2009/10, to £7,900 a year today.
Higher price inflation in later life should always be considered as part of a Financial Planning exercise, and particularly when considering the cost of long-term care.
Do speak to us if you have any questions about long-term care or funding the cost of care fees planning.
