Pensioners hit by 20% higher inflation
This is because food and energy prices, which take up a large proportion of pensioners' incomes, are rising faster than official inflation figures.
Although official figures show that the headline rate of inflation has fallen from 4.6% to 4.2% using the Consumer Price Index, the reality is biting much harder for pensions on fixed incomes.
The continued hike in food prices pushed inflation from 5.3% to 6.5% in June, due to higher meat, dairy and bread and cereal prices. As older people spend a greater percentage of their money on food, their cost of living is rising faster.
"Prices may have fallen in games consoles and electrical goods but the essential items that pensioners buy – namely heating and food – are still being severely affected by inflation levels, control of which continues to be in short supply," said Ros Altmann, Director General of Saga.
Bread was one of the items that rose significantly in price last month, up nearly 10% on last year and 2.5% higher than last month. Oils and fats were also up in price by nearly 16% compared with last year.
Hit from all angles
Retirees are also hit by ever-growing motor insurance premiums more so than other age groups – they've suffered a 24% increase in rates since last year due to being less likely to use the internet to shop around than younger people.
Energy bills have also risen, which is expected worsen next month following price rise ann ouncements from two of the big six providers, and others expected to follow suit. With an interest rate rise to boost savings pots looking very unlikely anytime soon, there's little relief for pensioners' finances.
"Month after month, this country's savers witness the value of their hard-earned savings whittled away by inflation," said Dr Altmann. "The fall in inflation is clearly positive but this appears to be more through luck than judgement and there is still a long way to go.
"The Bank should take a long hard look at the dangerous impact this double whammy of high inflation and low interest rates is having on the UK economy, rather than exclusively focusing on the presumed benefits of keeping rock bottom rates unchanged."