Millennials suffering twice the inflation rate of baby boomers

Bill and tip
Eating out and cafe culture are two major inflationary pressures for Millennials  Credit: Paul Grover

Adults under 30 are facing double the inflation rate of any other generation, due largely to rising rent but also to "lifestyle spending", new research has revealed. 

In the 12 months to June 2016, the rate of inflation for millennials was 0.8pc, compared to 0.4pc for baby boomers (50-64) and 0.3pc for over 75s.

According to fund platform Fidelity's latest generational inflation barometer, the increasing cost of living is largely driven by the younger group’s spending choices.

Millennials only spend 8pc of their income on supermarket shopping, for instance, where the prices of food and soft-drinks are falling.

By comparison, the cost of eating out and café culture – where they spend 14pc of their income – has been increasing significantly.

Rent is another highly inflationary area. Millennials spend 19pc of their income on rent and bills, which is more than any other generation.

Tom Stevenson, investment director for personal investing at Fidelity, said: “If you look at what lies behind the headline inflation figure, you will find that each age group feels the effects of inflation differently.

“For the last two years it has been young people who have borne the brunt of the rising cost of living.”

He added that they also don’t benefit as much from the drag on inflation afforded by cheaper grocery prices.

While the rate of increase in millennials' cost of living has risen from 0.6pc in June last year to its current 0.8pc, the older generations are also experiencing higher inflation.

In June 2015, for every older generation, the cost of living was falling.

Now they too are experiencing greater inflation, albeit not at the level of millennials.

According to Fidelity’s research, this is largely due to the increasing cost of recreational and cultural activities, which older generations spend a much higher proportion of their income on. 

Healthcare is another area putting pressure on inflation rates for the over 30s.

Unsurprisingly, over 75s spend most on prescriptions, hospital fees and dental services at 6pc, while the under-30s spend the least of any generation at 1pc.

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