Children hit hard by economic recession as ‘kidflation' soars
The rate of inflation for goods and services most commonly bought by children has risen at a rate 68 per cent faster than inflation (RPI) as a whole over the past three years, according to new research from Santander current accounts.
Santander analysed the Retail Price Index for goods and services typically purchased by the UK's 5 million 10-16 year-olds and compared it with the rate of inflation for all goods and services. It discovered that ‘kidflation', as it has been dubbed, has increased the price of goods routinely bought by children by 14.3 per cent between June 2008 and June 2011 compared to just 8.5 per cent for products and services in general, meaning children have been significantly worse-affected by the rising cost of living.
Contributing to this impact on children has been a 24.0 per cent increase in the cost of sweets and chocolates and a 16.2 per cent increase in the cost of soft drinks. Children's clothing has risen by 17.4 per cent, the cost of entertainment and other recreation has increased by 13.6 per cent and there has been a 10.4 per cent increase in the cost of telephone costs, which include mobile phones and text messages.
The findings are backed up by further research by Santander current accounts among more than 500 UK children aged between 10 and 16 - and their parents - revealing that two-thirds of young people (68 per cent) have noticed the things they spend their money on have become more expensive recently.
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 impacted with the costs of children's items apparently increasing more than the standard adult measure of inflation."
Reduction in pocket money
The financial situation for children is exacerbated by the revelation that almost half of parents surveyed say they have either reduced or stopped pocket money altogether or have started making their children earn it around the house due to difficult economic circumstances.
The findings reveal that one in 10 parents (10 per cent) has had to reduce their children's pocket money and a further 2 per cent have stopped it altogether. Some 13 per cent of parents have reduced the amount of pocket money they give and now make their children earn it through work around the house, and 21 per cent have started to make their children earn their money but haven't reduced the amount.
The average amount of pocket money given to children of this age group is £5.50 a week (£286 a year), including one in five parents (20 per cent) who don't give their kids any pocket money at all. Children aged 10 receive the least amount (£163 a year) while 15-year-olds receive most at nearly £400 a year.
Main items of expenditure
The research reveals that sweets, snacks and drinks are the most common things children buy, with 48 per cent listing these among their top three items of expenditure. One in three children (31 per cent) names going out with friends or family as a regular usage of their money, and one in four (27 per cent) regularly buys games for a DS, PSP, Wii or other games console.
One in four young people (25 per cent) buys magazines or books regularly, 22 per cent buy clothes or shoes, and 16 per cent frequently purchase CDs or download music. Some 13 per cent buy things to do with their hobbies, 12 per cent buy prepay for their mobile phone, pay a mobile phone bill or buy apps and accessories for their phone, and 9 per cent buy toys and games.Four in ten children (41 per cent) say they regularly put their pocket money in a piggy bank or savings jar at home or in a savings account at a bank, building society or Post Office, but while 42 per cent of 10-year-olds say they save this drops to 23 per cent by the time children reach 16.
Money ‘life skills'
Gary Millner, Director of Operations at pfeg, the Personal Finance Education Group, 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.
"With the average age for owning a mobile now being eight, it is important to ensure that all young people have the right knowledge and skills to be able to meet the challenges ahead and we believe the best way to equip them with this important life skill is through the teaching of personal finance education in school."
Santander youth current accounts
Santander offers two bank accounts suitable for young people; the 11 to 15 current account and the 16 to 18 current account. Both pay a market-leading in-credit interest rate of 3 per cent AER and online banking. The 11-15 account provides young people with a debit card for cash withdrawals while the 16-18 account provides a debit card which can be used for shopping and cash withdrawals.