1st August 2011
The bank found that the rate of inflation for children's spending has risen 68% faster than the retail price index (RPI) over the past three years. Nearly half of children aged 10-16 have had pocket money reduced, stopped altogether or are now being made to earn it.
Santander analysed the RPI for goods and services typically purchased by the UK's 5 million 10 to 16-year-olds and compared it with the rate of inflation for all goods and services.
It discovered that ‘kidflation' has increased the price of goods routinely bought by children by 14.3% between June 2008 and June 2011 compared to just 8.5% 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% increase in the cost of sweets and chocolates and a 16.2% increase in the cost of soft drinks.
Children's clothing has risen by 17.4%, the cost of entertainment and other recreation has increased by 13.6% and there has been a 10.4% increase in the cost of telephone costs, which include mobile phones and text messages.
The financial situation for children is exacerbated by the fact that almost half of parents surveyed had either reduced or stopped pocket money altogether or have started making their children earn it around the house due to difficult economic circumstances.
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%) 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.
Nici Audhlam-Gardner, director of banking at Santander, says: "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."
Gary Millner, director of operations at the Personal Finance Education Group, says: "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."
On the Guardian comment boards readers actually welcome the news.
evelinev writes: "Sounds like a healthy development, on the whole. Nothing wrong with doing the dishes to earn your pocket money, or having a newspaper round (that's what it was in my time, I guess the chores are a bit different now).
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