University students hit by inflation

University students are facing the most expensive academic year to date, with an inflation rate 50 per cent higher than average, research suggests.

The first Student Price Index survey, from the Open University, found that the true inflation rate for undergraduates in England is almost 7 per cent compared to the Consumer Price Index which currently stands at 4.4 per cent.

This is because, compared with other households, students spend a higher share of their total budget on items which have risen in price fastest over recent years - goods such as food and drink, clothing, tobacco, personal care products, housing and travel, plus tuition fees.

Students spend 75 per cent of their budget on these items altogether, compared to just over 50 per cent for the average UK household. Overall, their living costs are rising at 1.5 times the rate of that of the general population, it found.

Economist Alan Shipman, who produced the index, said: "Inflation hits different socio-economic groups in varying ways. "In my research, students are certainly experiencing a higher inflationary rate because the cost of what they need to buy is among the highest categories of price rises.

"To say that this will be the most expensive academic year for higher education students to date would not be stretching it. For many students, it is their first experience of independence, and stepping out into the current economic climate will be a hard lesson in itself."

The index found that in July this year, the annual rate for full-time undergraduates was 6.6 per cent, as opposed to the 4.4 per cent inflation rate for all UK households.

For part-time students it stands at 6.3 per cent - still more than 40 per cent over the general inflation rate. This is because they pay less in fees, and also spend a lower proportion of their budget on housing costs, which is one of the fastest rising components of the cost of living in the past year.

Faster inflation for students has been a pattern for several years, Mr Shipman found. In 2006 and 2007, full-time undergraduates' cost of living rose twice as fast as that of the average UK household. This year, although it is still higher, the gap has closed slightly because everyone has been hit by rises in food, transport and housing costs.

  • The index was calculated using figures from the most recent Student Income and Expenditure Survey for 2004/05 and price indices from National Statistics' Consumer Prince Index.