Santander

Santander

August 04, 2011 07:39 ET

Children Hit Hard by Economic Recession as 'Kidflation' Soars, Report Santander

Rate of inflation for children's spending has risen 68 per cent faster than RPI over the past three years

LONDON, UNITED KINGDOM--(Marketwire - Aug. 4, 2011) - The rate of inflation for goods and services most commonly bought by children has risen at a rate 68 per cent1 faster than inflation (RPI) as a whole over the past three years, according to new research from Santander current accounts1.

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 research2 by Santander 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."

Santander youth current accounts

Parents might want to consider savings with Santander for when they reach age 18.

Santander also offers two bank accounts suitable for young people; the 11 to 15 current account and the 16 to 18 current account.

Notes to editors
1.
Date RPI Kidflation
June 2008 216.8 181.0
June 2011 235.2 206.9

RPI has increased 8.5%, and kidflation by 14.3%. The percentage point difference between 14.3 and 8.5 is 5.8. This as a percentage of 8.5 (RPI), is 68.2%. This is the rate at which kidflation has increased beyond RPI.

RPI data between June 2008 and June 2011 was analysed. 'Kidflation' amalgamates the following categories from the RPI, which correspond most closely with what children aged 10-16 told Santander researchers they spent their money on.

Code Description
DOAU Soft drinks
DOAW Sweets and chocolates
DOBG Take-aways and snacks
DOCH Telephones, telemessages etc
DOCM Children's outerware
DOCW Rail fares
DOCX Bus and coach fares
DOCZ Audio-visual equipment
DODA CDs and tapes
DODB Toys, photographic and sports goods
DODF Entertainment and other recreation

Santander UK plc is a full-service retail and commercial bank providing services to 25 million customers in more than 1,400 branches and around 4,200 cash machines. It is a wholly owned subsidiary of Banco Santander. It provides retail banking products such as loans from Santander, as well as insurance products.

Banco Santander (SAN.MC, STD.N, BNC.LN) is a retail and commercial bank, based in Spain, with a presence in 10 main markets. At the end of 2010, Santander was the largest bank in the euro zone and 10th in the world by market capitalization. Founded in 1857, Santander had at year-end €1,362 billion in managed funds, more than 95 million customers, 14,082 branches – more than any other international bank – and 179,000 employees. It is the largest financial group in Spain and Latin America. Furthermore, it has relevant positions in the United Kingdom, Portugal, the U.S. northeast and, through its Santander Consumer Finance arm, in Germany and Poland. Santander registered €8,181 million in net attributable profit in 2010.

About pfeg

pfeg is the leading independent charity providing free support, resources and expert consultancy to help schools plan and teach financial capability. Its mission is to ensure that all young people leaving school are equipped with the confidence, skills and knowledge they need in financial matters to take part fully in society.

pfeg works with teachers, government, consumer bodies and financial industry representatives to assist schools in delivering personal finance education to the highest possible standards – making sure that children and young people are able to understand money and make informed choices which will guarantee them security and economic well-being in the long-term.

pfeg was named Educational Charity of the Year at the Charity Awards for 2010.

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