International student surge probably contributed to post-pandemic inflation: RBA
While the RBA's latest bulletin suggests international students add more to demand in the economy than they do to supply in the short term, its economists have rejected the idea that international students have been a major driver of the country's price pressures.
The increase in international students was 'just one of the many other forces at play' that drove inflation higher in the years immediately after the pandemic, when international students returned to the country in large numbers, they said.
Inflation peaked at 7.8 per cent in December 2022, and both house prices and rents have continued to climb, though at a slowing pace.
The total number of international students rose sharply from just under 300,000 in 2022 to 560,000 by the end of 2023, with the RBA's research noting such large swings could shift the dial on inflation, especially when the economy has little spare capacity or flexibility to increase supply.
The research found that international students spend about twice as much as residents, with the difference mostly explained by tuition fees. However, their spending – which is higher on average than the amount they earn – is also fuelled by the savings they bring with them.
Front-loaded spending on categories such as furniture may have contributed to inflation, the researchers said, as international students set up their lives in Australia and took some time to join the labour market.
Figures from the Australian Bureau of Statistics (ABS) in June showed people were leaving Australia in the highest numbers since the pandemic, with international student numbers hovering near record highs but starting to stabilise after years of concern over surging arrivals.
In May, the Albanese government's new assistant minister for international education, Julian Hill, refused to rule out another attempt to cap foreign student enrolments after its initial plans to cut down numbers was blocked by the Coalition and the Greens, saying: 'We are not going to back off managing the numbers'. During the election, the Coalition also vowed to slow international arrivals.
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