Childcare prices up in June quarter but overall rate of growth continues to moderate

The cost of childcare across Australia has risen by 1.0 per cent in the three months ending June 2019 compared to the three months ending March 2019 and is 7.9 per cent lower than the same period last year, according to the latest Consumer Price Index release by the Australian Bureau of Statistics (ABS). 

The data release is part of the ABS’s quarterly inflation report which seeks to measure the changes in out of pocket costs Australian families pay for early childhood education and care (ECEC) services. The calculation includes the impact of subsidies received. 

Overall, prices continue to benefit from the affordability improvements created by the introduction of the Child Care Subsidy in July 2018 with prices tracking 7.9 per cent below the same period last year. Of particular note is that the price rises from quarter to quarter appear to be continuing to moderate. 

From March 2012 to September 2016 it was relatively commonplace to see prices rising between 3.0 per cent and 4.0 per cent from one quarterly period to the next. Increases of this magnitude saw prices rise on average around 8.5 per cent per year. 

However, since March 2017 the percentage increases in prices from quarter to quarter appear to have moderated, with a range of between 1.0 per cent and 2.0 per cent each quarter compared to between 1.0 per cent and 4.0 per cent prior to 2017 becoming ‘the new normal’.

Although still materially above the general rate of inflation in Australia, this latest price series does suggest that operators are opting to pass on lower prices increases than the past, and that families continue to benefit from the affordability improvements generated by the Child Care Subsidy.  

Speaking to the figures in a separate release, Federal Minister for Education, Dan Tehan, noted “Across Australia, including in every capital city, average hourly fees are lower than the hourly rate cap. The latest data shows that around 85 per cent of centre-based day care services have an average hourly fee that is lower than the hourly rate cap.”

Melbourne plays catch up with big increase in June quarter

On a city by city basis, Canberra has the lowest relative price growth and Brisbane the highest in the last 12 months. 

However, although Canberra and Brisbane occupy the top and bottom positions in terms of relative price growth, Melbourne stands out as the city that is raising prices at the fastest rate for the second consecutive quarter. 

The three months ended June 2019 were particularly noticeable, with prices rising 2.8 per cent compared to the three months ended March 2019 – a much faster rate than any other city in Australia and a big jump from the increases seen in this quarter relative to previous years. 

It is unclear what has driven operators in Melbourne to raise prices to such a degree but it is certainly the exception when compared to other cities across Australia in the last quarter.

For the data release from the ABS please click here.