Interactive Investor

Care home fees up 10%

3rd May 2023 12:54

by Alice Guy from interactive investor

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Nursing homes now average £61K per year as the ONS launches an inflation comparison tool.

Long-term care in later life 600

The Office for National Statistics (ONS) has launched a new shopping prices comparison tool showing inflation for 450 individual items including nursing home inflation.

Care home fees

Alice Guy, Head of Pensions and Savings at interactive investor says: “The new inflation tool lays bare the staggering cost of nursing homes, which cost an average of £1,176 per week or £61,152 per year, almost twice as much as the average salary before tax and up 10% from last year. These figures will strike fear into the heart of many households and are simply unaffordable for many families.

“Many older pensioners rely on the state pension in old age and have little to their name apart from their main home and face seeing their assets wiped out. Under the current system, families facing care home fees are often forced to take out a lifetime mortgage or sell their home to pay for fees.

“New rules are expected in 2025, which will mean households who own assets worth between £20,000 and £100,000 will receive some support towards care home fees. If you have less than £20,000 in assets, you will not have to pay for care from your assets but may have to pay fees from your income. A total lifetime cap on care costs of £86,000 is also due to be introduced, but this will only cover care costs, not daily living costs such as accommodation, food, entertainment or utility bills. Care home residents or their families will continue to foot the bill for these costs.

“With an ageing population the cost of care home fees is a growing concern and falls disproportionately on those who sadly have dementia.”

Food inflation

Alice Guy says: “The tool also reveals the staggering cost of food inflation during the past year. Sixty grocery items in the shopping price comparison tool out of 450 saw prices rise by 20% or more. Some individual food items rose around or more than 40%: olive oil up 49%, cheddar cheese 42%, other hard cheese 44%, semi-skimmed milk 39%. While other similar items rose at a much slower rate: double cream 15%, Parmesan cheese 11%. 

“If you’ve noticed your weekly shop has gone up more than the reported inflation figures, you’re spot on. Although overall food inflation rose 19.2% in the year to March 2023, your basket total will depend on what you like to buy.

“The varied nature of inflation means that you can save money on your food shop by switching items. For example, you could switch from butter, which has risen 30% this year, to spreadable butter, which has risen only 16%.”

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