Pocket money inflation in 2009
The conventional measures of price inflation are the Retail Prices Index (RPI) and Consumer Price Index (CPI). Both look at the price change of a basket of goods and services to determine an average price inflation rate over twelve months.
As a measure, both are useful. They tell us about the general direction of prices in the economy and are used by those responsible for setting interest rates to manage future price inflation.
It is important to remember that they are only average figures. Our individual measures of inflation tend to vary from these published averages.
For this reason it can be useful to look at alternative measures of inflation. In the past we have seen how price inflation for older people tends to dramatically exceed the rates for younger people, due to the types of goods and services older people typically purchase.
Our own Chief Executive uses the cost of car parking at Guildford railway station as his personal measure of price inflation.
At the other end of the age spectrum is pocket money inflation.
New figures from the Halifax show that British children received an average of £6.24 a week in pocket money this year. Average pocket money is up from £6.13 in 2008. This is an increase of 11p a week, or 1.79% – not bad in a year when the RPI measure of price inflation has been in negative territory.
There is still some way to go before pocket money levels reach the highs of 2005 when the average amount paid was £8.37 a week.
As with so many areas of personal finance, the survey also discovered some disparity between boys and girls. The boys in the survey received an average of £1 a week more than the girls.
And just like adults, the children revealed mixed attitudes towards saving. Just under 50% admitted saving at least half of their pocket money, but around a quarter said they spent every penny.