New research published by Santander and the Personal Finance Education Group (an educational charity) indicates that the rate of inflation on items commonly bought by children has risen far more sharply that the retail price index (RPI) over the last three years.
The RPI has increased by 8.5% during this period, whilst kidflation’ has increased by 14.3%, the data shows.
Items typically purchased by children include confectionary and chocolate, which cost 24% more than they did 3 years ago, soft drinks (up 16.2%) and clothes (up 17.4%). Of the children surveyed, nearly half said sweets, snacks and drinks were what they spent most of their money on. One in three said they spent money on going out with friends or family, and one in four regularly bought video games, which have seen a 27% price hike. Mobile phone calls and texts (up 10.4%) were also listed as a common expense.
Nici Audhlam-Gardner is the director of banking at Santander. She said that this research dispels the idea that inflation is something “that only affects adults”. She added that the costs of routine purchases made by children are “rising at a very worrying rate” and said that the above-inflation rises are also making life difficult for patents.
The situation for kids is exacerbated by the fact that nearly half of parents have either cut back on pocket money or stopped it altogether. 10% of children now get less pocket money than they did before the recession, and 2% no longer receive anything. 13%, meanwhile, now have to do chores to earn less than what they used to get, and a further 21% have to earn their allowance but still receive the pre-recession amount.
Researchers surveyed 500 children, and found that, for children aged 10-16, the average weekly pocket money was £5.50. In 2007, by comparison, that figure was £8.01. That amounts to a 46% reduction.
More than 40% of 10-year-olds regularly deposit money in a piggy bank or savings account, but just 23% of 16-year-olds do so. It has been argued by groups including Which? Money that the pitiful interest rates offered to children make saving pointless, and that this makes it harder to encourage them to practice good money management.