George Osborne a UK economist contemplated on the method of calculating the cost of living in the UK. The living cost has become astronomical due to rising inflation. He opined that it would have an impact on millions of families in the UK.

The state benefits and pensions for the retired Britons will be increasing more slowly in the years to come. A significant percentage of the pension income goes to pay taxes. Consumer Price Index (CPI) rises more slowly than Rating Percentage Index (RPI). The former does not incorporate housing costs and mortgage rates. A big difference will be noticed in the balance of pension income and the tax amount paid, over the years.

CPI inflation has recently touched 4.4% whereas RPI is indexed at 5.5%. These are supposed to be 2.5% and 3.6% respectively from the next year. It is speculated that the rate of RPI will be two times higher than that of CPI by the year of 2015. As per the calculations made by George Osborne, the retired would miss out on amount of nearly £700 from the total pension income by April 2016.

However, the retirees who have marketable residential property need not be worried about the increasing cost of living in the UK. The house equity release schemes would help them bear the additional amount of living costs.