Today (28 March) marks the launch of the new one pound coin, 34 years after the coin was first introduced in 1983.
Much has changed since 1983, when Margaret Thatcher won her second term as Prime Minister, Culture Club topped the charts and Breakfast TV first aired in the UK. New analysis from Aviva1 also shows how inflation has changed the purchasing power of the one pound coin over this time, shrinking it by two-thirds.
The new 32p coin
Today, one pound will purchase one-third of what it could in 1983. Today, it has a relative purchasing power of only 32 pence, compared to the purchasing power of one pound in 1983. If the Bank of England had wanted the new coin to have the same purchasing power it had enjoyed in 1983, today’s new coin should be revalued as the £3.10 coin.
Pocket money prices
Looked at in another way, parents today should be giving their children at least three times the pocket money they themselves perhaps received in 1983.
Commenting on the incredible shrinking coin, Alistair McQueen, Head of Saving and Retirement said:
“Price inflation is returning. In March, inflation broke through the government’s 2% target for the first time since 2013. And recent research from Aviva2 found the rising cost of daily necessities to be the number one financial concern amongst parents in the UK.
“Inflation silently shrinks the value of our hard-earned cash. This simple example powerfully demonstrates the value of constant budgeting and careful investing to minimise its impact. With inflation on the up, the need for vigilance is greater than it has been for a number of years.
“The purchasing power of the one pound coin may be shrinking, but with constant budgeting and careful investing, the value of your savings don’t have to.”
Fiona Whytock +44 (0)7800 692299
Alistair McQueen is available for interview
1 Aviva research: Analysis of the relative purchasing power of one pound, based on official ONS ‘composite price index 1800 to 2016’, published on 21 March 2017 - https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation
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