University tuition fees force up inflation

INFLATION rose 0.5% in October fuelled by escalating university tuition fees, latest data showed today.

The Office for National Statistics said the Consumer Prices Index (CPI) increased to 2.7% last month – higher than many observers were expecting.

“The main upward pressure came from the education sector (university tuition fees) with smaller upward contributions from food & non-alcoholic beverages and transport,” said the ONS.

University tuition fees have almost trebled this year after the Government lifted the cap to £9,000.

The CPI figure was tempered slightly by downward pressures on housing & household services, recreation and miscellaneous goods & services but the steep rise overall will be disappointing for the Bank of England and Governor Sir Mervyn King will once again have to write to the Chancellor explaining what measures he plans in order to get the figure back in line with the Government’s target of 2%.

The Retail Prices Index (RPI) rose by even more – up 0.6% on September (2.6%) to 3.2%. The ONS said the main contributors to the change were the same as for the CPI.

Responding to the rise, business leaders in the West Midlands urged the Government and the Bank of England to act.

Steve Brittan, new president of Birmingham Chamber of Commerce Group, said: “Today’s rise was to be expected as it will have taken into account energy price rises ahead of winter, the rise in tuition fees and poor harvests across Europe. 

“High inflation isn’t good for our businesses or the economy and so the Bank of England and Government must do all that they can to control the impact but we must also recognise that events across the globe can have huge impacts on our rate of inflation.”

He said despite the steep rise, the chamber was still confident the rate would edge down to the Government’s target of 2%.

He added that the rise had to be viewed in context and should be set against the 5.2% level seen in September 2011.