According to figures released by the Office of National Statistics (ONS) earlier this week, the Consumer Price Index (CPI) has increased by 2.9 per cent in the past year. This is just short of one percentage point above the Bank of England’s inflation target. But what does this mean exactly? Essentially, prices are 2.9 per cent higher than they were a year ago, increasing at a rate higher than expected, and prices have risen at their fastest pace in more than a year.
To calculate the rate of inflation, economists compile a ‘basket’ of more than 700 goods and services that an average household consumes and then records the changes in prices for these goods over time. The biggest factors driving the latest increase were fuel costs, clothing and footwear.
But how have children’s baskets been affected and what money skills may be required to deal with the change? What are children spending their pocket money on, and how has the inflation rate affected what they can and cannot buy with their weekly allowances?
goHenry has been looking at children’s baskets as a separate group, to calculate our own ‘Children’s Price Index’ (as we like to call it); a collection of children’s top purchases which we’ll be analysing over the coming months to help you keep track of what will be taking a greater, or lesser, percentage of your children’s pocket money.
Top children’s expenditures include the following categories:
- Confectionary (sweets and chocolate)
- Clothing and footwear
- Games and toys
The biggest category for children’s purchases over the past year has been clothing and footwear. Interestingly, confectionary and games & toys have decreased in cost. Overall, it looks like good news for children.
To help provide more context, we’ve also analysed 4,000 transactions of children’s online purchases, based on data taken from more than 1,000 of our families. Unsurprisingly, the top purchases for both boys and girls include music, online games, and smartphone apps. You can see the full results below.
Top Five Merchants for Boys
2. Google Play
5. Sony Entertainment Network
Top Five Merchants for Girls
3. Google Play
4. Pay Pal
The good news for children is that these prices haven’t changed much over recent months. While clothing and footwear may still be a top choice for children to spend their allowance and pocket money on, the electronics and apps world has significantly changed the way kids spend— and it’s proving to significantly work in their favour as well.
With average weekly pocket money for 11-14 year olds falling between £8.90- £10.66, something as simple as a £0.69 iTunes download or £1.50 online game purchase is more than enough to keep them satisfied, and still leave room for a few treats and contributions toward a monthly savings plan too.
Stay tuned for more on the latest in the children’s price index next month, as we continue to explore key children’s spending categories, how they’ve changed and more.
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