Don't have time for the newspapers? No problemo! Here's this week's compact news roundup of the student money news you're probably better off knowing about.
It was revealed that the main reason for the rise was the cost of energy prices going up along with transport and food. However, all is not lost as many experts have been quoted as saying that they believe the rate of inflation may drop to around 2% by the end of 2013 or even 2012.
What is inflation?
For those of use that don’t do a business style subject at uni (or just aren’t that well informed) it’s a good idea to give a simple explanation as to what inflation is.
Inflation is the percentage of change in price of goods and services (such as food and bus passes).
Experts look at a number of key items that we buy on a regular basis (such as bread) and work out the overall cost increase.
Put simply, as the current inflation rate is 5.2% it means that we are currently paying 5.2% more than this time last year for essential goods and services.
How does inflation affect students?
Inflation mainly affects interest rates and wages. However, in recent years wages have not followed inflation rates as they previously did.
As students the main affects you will see are:
- Rise in prices: the cost of goods will go up and things such as your weekly shop will unfortunately be more expensive
- Rise in wages: if you are looking for part time work whilst studying then you may see employers offering higher wages. However, many business owners in the private sector have said they will not look to match inflation but only aim to ease the gap between pay increases and the amount on 5.2%.
Unfortunately your maintenance loan does not follow inflation at its current rate but it may rise next year. Your student debt for both tuition fees and maintenance follows inflation as its base of interest which is unfortunate. Even though a student loan is not meant to have interest the inflation will affect it and when employers are not increasing wages at the rate of inflation it leaves graduates worse off.
How can students (you) beat inflation?
- Cut spending – It may not seem ideal but you will have to cut spending on those things that you would class as a treat
- Buy stamps – It has been revealed that the price of a first class stamp will rise to £1. If you buy a lot in bulk now you could sell them in the future (or just collect them…haha)
- Buy in bulk – If you know that you eat a lot of something everyday then why not buy in bulk before prices rise.
- Invest in commodities – Commodities like gold rise in price all the time and as long as you have a better selling strategy than Gordon Brown you could make a lot of money (but be careful as it is risky)
- Saving – The saving rates may be lower than inflation but if you put money into a savings account then you will be loosing less than if you don’t. It has the least risk and a safe return.
- Look out for student discounts – If you use sites like ours to get the best student discounts then you will benefit from saving money on those must have purchases (even if it is a jumper from Topshop).