Pensioners have seen the cost of goods and services they use rise by more than one-third during the past 10 years, new research has shown.

The rate at which the cost of living for pensioners is rising outstrips increases in retail price inflation, which has risen by 32% during the past decade compared with a 36% jump in inflation experienced by pensioners.

The group said housing costs had been the key driver behind the increase, with these rising by 69% since 1998, while council tax has soared by 89% and the cost of maintaining property had jumped by 84%.

Housing is the single largest cost pensioners face, with accommodation costing an average of £63.65 a week, accounting for 25% of pensioners' overall expenditure.

Other areas of spending which have jumped up include alcohol and tobacco, up by 45% during the past 10 years, while transport costs have increased by 43% and food and non-alcoholic drink are up by 29%.

The only major category where prices have fallen is clothing and footwear, which is now 23% cheaper than 10 years ago, according to life insurer Clerical Medical.

The report came as insurers, including Norwich Union, move to change the annuity market with a new pricing system that could leave those in more affluent neighbourhoods worse off.

The insurer, thought to have around 10% of the UK market, is to start taking into account postcodes, marital status and smoking when deciding how much annual pension people will receive.

Annuities, which give an annual income for life in exchange for a pension fund at retirement, are based on factors used to determine how long a customer is expected to live - the longer, the lower the payout and vice versa.

It bases annuity rates on a person's age, sex and pension, and the changes will mean those in affluent neighbourhoods, who are generally expected to live longer, could be offered a lower rate.

A spokesman for Age Concern Scotland said: "Many older people in Scotland are suffering disproportionately from increases in the cost of essential everyday items such as food and fuel but are equally hit hard by council tax and increasing costs for personal items.

"Age Concern Scotland believes the state pension should be linked to earnings which will then allow pensioner income to keep pace with the rest of society and minimise the impact of above-inflation price rises."

Martin Ellis, chief economist at Clerical Medical, said: "The average cost of living facing pensioners has risen by more than one-third over the past decade.

"The cost of living for pensioners has increased by more than that for all households, particularly in the last five years."