University students get welcome economic news – student inflation is down

19 November 2008

The cost of living for higher education students in the UK has dropped dramatically in the October Student Price Index (SPI) compiled by Open University economist Alan Shipman.

In October, when CPI inflation slowed to 4.5% (from its peak of 5.2% in September), the OU Student Price Index for full-time students in England dropped almost two points to 4.7%, from 6.4% in September.

“Students are still suffering from higher inflation than the average. This is due to the past year’s rapid rise in housing, food, tuition and travel costs, which absorb much more of their student budget (around 60%) than the average person. Slower tuition cost inflation is the main reason the differential over CPI has narrowed,” Shipman said.

For part-time students the rate was higher at 5% in October. Part-time students spent a higher proportion (than full timers) on housing and transport costs, including fares and fuel when prices rose rapidly over the past year.

The rises are lower in Wales and Northern Ireland because housing is a smaller component of student budgets. And lower in Scotland because of lower tuition costs.

In Wales part-timers are still experiencing lower inflation than full-timers, which was also the trend in England in the third quarter. Welsh students have a lower proportion spent on housing (than full-time students) that outweighs their proportionally greater spend on food and transport.

“The differential over general inflation has narrowed,” Shipman said, ”but students’ living costs are still up much faster than for the general population in the past year. Going forward, we expect students to get some relief from falling accommodation costs, but there’s no reason to expect the differential over general prices to close.”

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