The average older person living alone will lose more than €1,500 in spending power by the end of the year, according to analysis from Age Action.
The average older couple will lose more than €3,300, the advocacy group said, unless the Government “takes action” in the upcoming Budget.
By the end of 2023, the total loss of older persons could be 20 per cent or more of their spending power and “most of them have no way of replacing this loss”, the charity said, which carried analysis based on average incomes and savings from CSO surveys.
Consumer prices rose by an average of 9.1 per cent in the 12 months to June – the fastest rate of price growth seen in the Irish economy since 1984, according to the latest CSO figures.
Age Action has called on the Government to raise the State pension by at least €23 from Budget day, which takes place on September 27th, to “protect older persons this winter”.
“While the nominal value of €1,000 remains the same, it will only buy €900 worth of home heating oil or groceries compared to one year ago, and potentially as little as €800 worth by end-2023,” the charity said in a statement on Tuesday.
“By the end of 2022, older persons are likely to experience inflation at 9.8 per cent. This means that although they may have nominally the same income or level of savings, their spending power will be down nearly 10 per cent.”
Dr Nat O’Connor, policy specialist with Age Action, said the likely loss of spending power in 2022 was “shocking”.
“Over the course of 2022, the spending power of the full rate State pension alone will go down by €589 for an individual or €1,118 for a couple,” he said.
“This loss of income means a struggle to buy home heating oil or to get a car serviced. It is causing older persons around the country to turn off their heating and to reduce their travel, because petrol and diesel are so expensive.
“But many people haven’t realised their losses yet, as their income and bank balance still looks the same as last year. It is only when someone goes to spend money that they see how their spending power has eroded and they have been left behind by rising prices.”
Dr O’Connor said most older people have a low level of cash savings and if they have a private or occupational pension, it was “modest and not linked to inflation”.
“With the spending power of both of these being cut, the State pension is more important than ever as the bedrock of income in older age.”
He said raising all social welfare income by at least €20 would cost less than €1.5 billion “at a time when inflation has brought in several billion of extra tax revenue”.
“Indexing social protection incomes so they rise in line with inflation is done automatically in the UK and across Europe. Ireland should do the same, to preserve some part of people’s living standards and to keep spending in local shops and services,” he added.
“We haven’t had this situation since the 1980s, and economic commentators have been too slow to realise just how bad this winter is going to be for older persons, many of whom will struggle to heat their homes.”
New electricity rebates, an extra week of welfare payments, and a Christmas bonus payment in child benefit are among one-off measures under consideration by the Government in the upcoming Budget.
Minister for Housing Darragh O’Brien is expected to seek tax breaks for both landlords and renters in the budget amid an exodus of smaller landlords from the market.