Recent research has revealed the true cost of being a pensioner. It is estimated that the true inflation figure for pensioners will be up to 7% - more than twice the national inflation rate.

The main areas responsible for this hike are fuel and food, which, according to the weightings of the Government’s pensioners price index, account for over one-third (14% and 22% respectively) of all pensioners’ expenditure. Fuel and food prices will increase significantly in 2008, with fuel up by around 15% and food up by 12%. This means that even if all other items paid for by pensioners retain the predicted inflation rate of 3%, based on food and fuel hikes alone, pensioners will fare the worst of all consumers, facing 7% inflation overall.

Both EDF energy and npower have already announced fuel increases this year - EDF 13% for gas and 8% for electricity, npower 17% for gas and 13% for electricity. These rises have been blamed on the cost of fuel in the wholesale markets. British Gas has also followed suit with rises of around 15%.

Official figures released last month showed wholesale food prices rose by 7.4% in 2007 - more than three times the headline rate of inflation. The increase, the highest since the Office for National Statistics (ONS) began keeping records in 1992, has driven the cost of a consumer’s average basket of groceries up by 12% in a year. This trend is predicted to continue into 2008.

Compounding the woes of pensioners is rising council tax bills. The average council tax bill is expected to increase by about 4% to £1,380 in April, making a total increase of more than 100% since Labour took office. Worth pointing out is that Council tax and other housing costs are excluded from the Government’s pensioners price index. Not surprisingly, therefore, almost every year over the past five years, the pensioners price index has outstripped the retail price index (excluding housing), with pensioners facing higher than average inflation costs.

Again, not surprisingly, it was recently announced that around 1.27 million pensioners are still working beyond the age they might traditionally have expected to be retired, as the rising cost of living in the UK prevents retirement.

Bob Mottershead, Retail Sales Executive, Newcastle Building Society, comments: “These findings paint a bleak picture for pensioners in 2008. The rising cost of living is undoubtedly a concern for us all, however, commonly it is those in later years who suffer the most. For the many relying on the basic state pension of just £87.30 per week, these increases could negatively impact everyday quality of life.”