Children are feeling the effects of the UK’s cost of living crisis as nearly a third of parents cut their pocket money.
Halifax’s annual Pocket Money survey shows that the average weekly pocket money has fallen by 23 per cent, from £6.48 last year to £4.99 now.
Energy costs are the top concern for British parents, according to the survey, with 71 per cent of respondents citing it as their top concern.
Energy bills are expected to rise by as much as 70 per cent in October, with a further increase in January 2023. Last week the Bank of England warned that UK inflation could hit 13 per cent by the autumn.
Despite a deteriorating economic climate, half of British parents said they were willing to sacrifice their own spending to keep their children’s weekly money going. Recreational expenses such as going out to eat and “treats” such as designer items were among the parents’ savings.
Since Halifax began tracking pocket money in 1987, interest rates and inflation have clearly impacted the amounts parents spend.
“Primarily periods of low inflation, and therefore lower interest rates, tend to correspond with higher or growing pocket money levels,” Halifax said.
A period of economic stability in the late 1990s and early 2000s saw average pocket money soar, reaching a peak of more than £8 a week in 2007. After the financial crisis, when interest rates fell sharply, it fell again but inflation rose.
There has been another decline during the pandemic as millions of parents faced an uncertain economic future.
“More recently, sharp increases in inflation have been accompanied by sharp falls in spending money,” Halifax added.
According to the parents’ voting, the most popular purchases with pocket money are still gambling and sweets. Toys follow closely followed by clothing, then hobbies such as books.