What does this mean for their Financial Planning?
Prices for the under-30s have dramatically risen since 2001.
In fact, since 2001 these prices have risen nearly twice as quickly as the average for the population in general.
Here at Informed Choice, we mainly serve older clients who are approaching retirement or living in retirement.
However, we like to keep an eye on the personal financial planning trends which are important to the younger generations too, with many of our clients concerned about the impact of these trends on their children or grandchildren.
As things stand, price inflation as measured by the Consumer Prices Index (CPI) is running at 0.3%.
This is well below the Government target of 2%, indicating that inflation may not be a big concern right now.
However, according to a new study, different age groups experience price inflation differently.
So what are the under-30’s spending their money on which has caused this different experience of price inflation?
The data suggests that the areas under-30’s are spending their money have faster rising prices.
These spending areas include housing, education and restaurants, all of which have been rising faster than average inflation.
In the meantime food, transport and recreational prices have been increasing at a slower pace, which is the area that the under-30’s spend their money the least.
Other figures appear to show that prices for under-30s have risen by 46% more than the headline figure due to the introduction of the state pension triple lock, which guarantees an annual rise in the state pension of at least 2.5%.
Commenting on the study, Alistair McQueen, Savings & Retirement manager at Aviva, said:
“The under-30s are facing a double-whammy. Prices are rising faster in areas where they spend more, and rising slower in areas where they spend less.
“These underlying differences are often hidden when we plan our finances.
“Price movements are outside anyone’s direct control, but this does not mean we are powerless to act.
“There are two actions that the young can take.
“Firstly, careful and constant budgeting helps us manage the impacts of price movements. A simple understanding of money coming in and money going out will help defend us against “hidden” price movements.
“Secondly, making any savings work harder to counter the effects of inflation makes good financial sense. An individual savings account (ISA) and a pension, with their positive tax advantages, would be a good place for many savers to begin.”
Price inflation is a really important consideration for all of us, young or old.
We have often written on this blog in the past about the so-called silver inflation phenomenon, which results in higher price inflation for people in retirement due to the nature of goods and services they consume in later life.
The official price inflation figures are very much an average and they hide a range of real-world experiences for different age groups, demographics and individuals.
When making your own assumptions about your future experience of price inflation, it is important to think carefully about what impact inflation might have on your ability to achieve financial goals in life.