Tuition fees causes inflation spike
INFLATION hit 2.7% in October fuelled by escalating university tuition fees, latest data showed today.
The Office for National Statistics said the Consumer Prices Index (CPI) increased by half a percentage point last month – higher than many observers were expecting.
Coverage of the inflation data is brought to readers of TheBusinessDesk.com in partnership with stockbrokers Redmayne-Bentley.
“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.
Phillip Wong, from Redmayne-Bentley, said: “Following the latest inflation figures with CPI at 2.7% and RPI at 3.2%, UK growth prospects could come under pressure over the next several months as the public face higher costs of living.
“Recently the Bank of England decided not to extend the QE programme, but it appears that inflation will continue to find its way into the economic system over the short to medium term through channels such as rising food costs and energy prices. “