Sweets and soft drinks prices have risen dramatically making children big losers in the recession, according to research
Children have been among the biggest losers in the economic recession because of a huge rise in the cost of items they buy and a reduction in pocket money.
The rate of inflation on goods bought by children, “kidflation”, has risen 68% more than retail price inflation over the past three years. While the retail prices index (RPI) has increased 8.5%, kidflation has gone up 14.3%, according to research by Santander and the educational charity Personal Finance Education Group (pfeg).
Children’s typical purchases include sweets and chocolates, which have seen a 24% price hike, soft drinks up by 16.2% and the price of children’s clothing has risen by 17.4%. Nearly half of children listed sweets, snacks and drinks as the most common things they bought, while one in three named going out with friends or family as a regular use of their money. One in four spent money regularly on games for games consoles such as PlayStations, Nintendo and Wii, which are up by 27%. Telephone costs, which include mobile phones and text messages, have increased by 10.4%.
Nici Audhlam-Gardner, director of banking at Santander, said: “Inflation is generally considered to be something that only affects adults, but it’s evident from our research that children have been impacted too while inflation has been creeping up over the past few years.
“Children are seeing the costs of their everyday purchases rising at a very worrying rate, and parents are also being affected by the costs of children’s items apparently increasing by more than the standard adult measure of inflation.”
To make matters worse, almost half the parents questioned have either reduced or stopped the pocket money they give to their children, or have started making them earn it through work in their home. One in 10 have reduced their children’s pocket money, and 2% have stopped it completely. A further 13% have reduced the pocket money they give and now make them work for it, while 21% are making their children earn the money but have not reduced it.
Out of the 500 children who were surveyed, the average amount of pocket money among 10- to 16-year-olds is £5.50 a week, amounting to £286 a year. Children aged 10 receive the least amount of pocket money at £163 a year, while 15-year-olds receive nearly £400 a year. In 2007, the average pocket money was £8.01 per week.
Despite this, the research found that nearly 42% of 10-year-olds regularly put their money into a piggy bank or a savings account at a bank, building society or Post Office, but this figure halves to 23% by the time children reach the age of 16.
Gary Millner, director of operations at pfeg, said: “The report emphasises the extra inflationary burden faced by our children in managing their finances and whether we like it or not our children are exposed to more financial decision making now at an earlier age than their parents.”
However, recent research by consumer organisation Which? Money has shown that children’s attempts to save may be pointless, with many children earning tiny amounts of interest on their savings accounts. Half of banks paid 1% AER or less, with an average rate at 1.01%. The lowest interest was with First Trust Bank’s Junior Saver account, which paid just 0.05%- 50p for every £1,000 saved.
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