| 15.8°C Dublin

What the rising cost of education can teach us

Close

While section A of higher level was reasonable, Section B of Paper two was certainly more challenging

While section A of higher level was reasonable, Section B of Paper two was certainly more challenging

While section A of higher level was reasonable, Section B of Paper two was certainly more challenging

Perhaps the most interesting release this week comes on Thursday, with the publication of the October inflation figures.

This week's data will probably be released too early to capture the sneaky hike in the cost of public transport imposed on passengers, but may reflect falling energy prices.

If so, we may well see annual inflation running at an even lower rate in October than the 0.3pc seen in September, and another month-on-month decrease in prices.

Last month both measures of inflation used by the Central Statistics Office showed that we are now seeing month-on-month deflation thanks to falling transport costs.

We are not alone; month-on-month deflation hit five other peripheral Eurozone countries in September. Greece, Spain, Italy, Slovenia and Slovakia all showed deflation on persistently-depressed household demand while Portugal and Cyprus showed no inflation.

The inability of retailers, manufacturers and service providers outside the public sector to hike prices appears likely to continue for some time and reflects, among other things, how frugal consumers remain and the inability of workers to look for higher wages.

Many economists expect this to change next year as the labour market improves, but that forecast may well be wrong; the labour market experienced a dramatic improvement this year but inflation dipped even further than last year as energy prices tumbled.

There are pockets of the economy where inflation is still rampant. No parent will be surprised to learn that the education sector continues to register inflation rates that would have Mario Draghi and his chums at the European Central Bank hiking interest rates before you can say increments.

The cost of education jumped 4.5pc in the past 12 months - more than 13 times faster than inflation in general. The only thing that came close was the 4.1pc increase in the cost of smoking and drinking. At first glance, it is somewhat surprising that the cost of school books and school fees continues to rise relentlessly at a time when almost everything else is going down in price.

Even doctors and hospitals have been forced to acknowledge the financial suffering of their patients and begin to tackle the horrendous costs in the healthcare industry by prescribing generic drugs and the like.

Their colleagues in the education sector are so far immune to the same pressures; it seems that when forced to choose between medicine and education, many parents pick education.

The worst inflation is seen at third level, where costs have soared 6.3pc in the past 12 months. Next worst is secondary education where costs are rising at 2.4pc, while inflation in primary schools is only rising at double the general rate, coming in at 0.3pc.

The Labour Party likes to claim credit for abolishing third-level fees, but it is quite clear that the party is presiding over the reintroduction of fees by stealth. It says a lot about the stoicism of parents - and their love for their children - that inflation in the education sector has not produced more of a stink politically. Or perhaps there is an inverse relationship between the state of the economy and spending on education?

After all, Irish parents have always been eager to shell out for schooling, even during the worst days of the 1950s or 1980s.

It's a nice theory, but a quick look at the CSO's archives shows that inflation in the education sector was roaring ahead during the Celtic Tiger years as well. The cost of education, it appears, just keeps rising.

The Great Recession has shown us that almost every industry and business can be brought low, no matter how venerable.

But it seems that there is one sector that remains immune; the sector that plays on all the hopes and fears of ordinary parents.

The week ahead

MONDAY

Construction Sector PMI for October – house building in September grew at its fastest pace since Ulster Bank first began its construction sector index 14 years ago.

Kingspan interim management statement

 

TUESDAY

Agricultural Price Indices for September.

CRH interim management statement

Banking & Payments Federation Conference, Dublin

 

WEDNESDAY

Central Bank (above) releases statistics on securities (September)

Permanent TSB CEO Jeremy Masding before Oireachtas Finance Committee

 

THURSDAY

Consumer Price Index October (inflation)

AIB CEO David Duffy and Ulster Bank’s Jim Brown before Oireachtas Finance Committee

 

FRIDAY

Central Bank retail interest rate and money and banking statistics

Irish Independent