‘Kidflation’ Puts Extra Financial Pressure on Families

A Santander study has found inflation for goods and services most commonly bought by children has risen more than two thirds faster than the general measure.

Inflation is on the rise, causing goods and services to cost more – that much we know from daily experience.

But now a new survey by high street bank Santander has highlighted an additional problem for families with children and teenagers: inflation on products commonly bought by young people is rising at a much faster rate.

According to Santander, prices for the goods and services most often bought by the 10-16 age group increased by 14.3% between June 2008 and June 2011 – compared to 8.5% for general measure of inflation.

This means that what Santander refers to as ‘kidflation’ has risen 68% faster than the general rate, significantly increasing the cost of living for children – and their parents.

Over the three-year period, the price of chocolates and sweets increased 24%, soft drinks climbed 16.2% and the price of kids’ clothes rose 17.4%. The cost of telephone services (including mobile phone costs) grew by 10.4% and general entertainment and recreation saw a 13.6% rise.

Santander’s research found that confectionery, snacks and drinks accounted for most of 10-16 year olds’ spending. Going out with friends and family came second, while buying games for consoles such the Playstation, Xbox and Wii formed the third-largest area of expenditure.

Nici Audhlam-Gardner of Santander commented: “Children are seeing the costs of 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.”

Smaller allowances

To make matters worse for youngsters, Santander also found that 13% of parents have reduced the amount of pocket money they give to their children. However, 21% of parents have not lowered the amount – but have instead required their children to work around the house and do chores to earn it.

The average amount of pocket money received by 10 to 16 year olds was just £5.50 per week or £286 per year, said Santander, which has made the impact of inflation that more harsh for UK kids.

Moneyhighstreet comments: “Increasing ‘kidflation’ is putting further pressure on parents – who provide most of their children’s spending money. But this is also a good opportunity for parents to educate their kids about the importance of finances and budgeting.

“One of the ways to do this is to use a Visa prepaid card for kids – to help give them both independence and learn how to manage their personal finances.

“Encouraging your kids to get a part-time job and to start saving will also result in less pressure on you to pay for the goods and services they need – and may be one measure to help you avoid the growing trend of dipping into their education fund to make ends meet.”