Education Fuels Dubai Inflation; Hits 2010 Levels

Education Fuels Dubai Inflation; Hits 2010 Levels
By David Westley
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Rising education costs have helped push inflation in Dubai up to its highest rate since 2010 according to data released by the National Bureau of Statistics.

For the first quarter of 2014, the inflation rate in Dubai rose to 2.59 percent compared to 0.13 percent in the same period of 2013.

Education costs however surged above trend at 3.9% growth year on year. Only housing costs (4.34%) and Food (4.04%) have been growing at a faster rate.

According to economists, growth is expected to quicken further in 2014 and 2015, although education costs, unlike rents or food costs, are currently controlled by the emirates education regulators, not by the market.

Fee increases for 2014-15 have been fixed at 3.48 per cent for Outstanding schools, 2.61 per cent for Good schools and 1.74 per cent for Acceptable and Unsatisfactory schools based on the 1.74 per cent Education Cost Index increase in 2013.

While these controls should help keep education costs down, it does not affect the price point of new schools that are opening (which tend to have fees above market rate). More fundamentally there is mounting pressure from the UAE's school owners to dismantle fee caps altogether.

According to the Dubai Private Schools Group (DPSG) the current regulatory environment affecting schools in Dubai is creating a ‘funding gap’ which is hindering investment in the sector by depressing margins, and failing to take account of the real cost drivers in delivering education in the UAE.

A wider point is made by the likes of GEMs education boss, Dino Varkey, and most recently, Gene Eidelman, president of Mosaica Education, that the UAE would ultimately have a better priced system if the market was responsible for prices. “Instead of controlling the fees, more effort needs to be done to incentivise people to create schools.

"If you have more schools … if you give more choices, then you don’t need to worry about controlling the fees. If the supply increases, the market will control the tuition fees."


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