The Danger in 'Senior' Inflation

For Aging Americans, Rising Prices Will Take an Even Bigger Toll

Worried about inflation? It may be an even bigger danger than most of us realize.

That's because the American population is aging. The Baby Boomer generation is heading into retirement. And inflation for older Americans is considerably higher than it is for the rest of the population.

This is an underappreciated topic. There isn't much research on it. People usually talk about the average inflation figure, the Consumer Price Index.

But common sense, as well as official statistics, tells the story.

Look, first, at the products where inflation in recent times has been lowest, such as high-tech gear, and clothes.

In both areas, prices are actually falling, and have been for years. Last year's computers are on sale. Even the hottest product in recent memory, the iPhone, has had its price slashed. Through January, reports the Bureau of Labor Statistics, information-technology prices fell around 6.2% on average, and apparel by 0.2%.

But these are mostly products bought by younger Americans.

Meanwhile, according to BLS data, the cost of food in the supermarket is rising by 5.7% a year. Home energy is up 5.5%. Gasoline is up 34%.

It costs 8.9% more to fly than it did a year ago. Medical services are rising by 5.7% a year, hospital services by 8.5%, home health-care and nursing-home fees by 4.5%. Funerals are up 4.8%.

Overall, this "senior" inflation is running well ahead of the official CPI, even though that just scared investors by rising at a 4.4% annual rate. The latest producer-price data, out Tuesday, added to concerns.

Falling house prices, while deflationary, actually hurt seniors as well. Many of those heading into retirement are, effectively, net sellers of real estate. Empty nesters often hope to cash out of their big family homes and move to something smaller, pocketing the difference. Via reverse mortgages, many also may want to tap into their homes' values in the years ahead.

If "senior" inflation continues to run well ahead of general inflation, it could raise two extra problems, even for those who are a long way from retirement.

The first is that tens of millions of Americans may be in even worse shape financially than they realize. We already have a savings crisis in this country. The national savings rate is on the floor, and millions of Americans are financially unprepared for retirement. Yet most of their personal retirement calculations factor in "standard" CPI estimates.  Raise those numbers by a percentage point or two per year, and what looks like a savings "shortfall" by the time you reach 65 will stretch into a yawning chasm.

The second risk is that as the population ages, so this "senior" inflation figure will become closer and closer to the norm. And that would add further impetus to rising official inflation.

Write to Brett Arends at brett.arends@wsj.com