The latest Independent Schools Australia report highlights several economic trends affecting NSW Independent schools.

In Sydney, the Consumer Price Index (CPI) for all goods and services rose by 1.9% over the past year, and headline inflation edged up to 3.0 per cent in August, an upside surprise driven almost exclusively by the unwinding of government electricity subsidies. These figures are higher than most other states, signalling rising cost pressures for families. Notably, the June quarter CPI is used to index recurrent government funding for schools.

Wage Price Index (WPI) for the NSW private sector grew by 3.1%, in line with the national average. Schools should note that the WPI June quarter data is used to determine recurrent funding indexation. WPI (education) nationally was 3.4% in the private sector and 3.8% in the public sector. Labour market conditions continue to soften, reflecting the below trend rate of economic growth. Employment fell by 6,000 in August to lock in four months of weaker jobs data. While the unemployment rate was steady in the month at 4.2 per cent, the number of job vacancies fell 2.7 per cent in August and job vacancies are now down 33 per cent from the peak, indicating tighter employment conditions driven by corporate budget constraints. 

Producer Price Index (PPI) for non-residential building construction in NSW increased by 4.4%. This impacts capital works budgets, with the June quarter PPI used to index capital funding grants. Estimates are for the PPI to stay around 4.5% until 2027. Prices for concrete have risen 6.6% from 2024 due to large infrastructure projects in Sydney and NSW absorbing supply. Plasterboard and bricks rose 6.4% There has been a modest reduction in steel prices over the past 12 months.

The Reserve Bank held the cash rate steady at 3.6% at the 1 October meeting. This keeps the pressure on family household budgets as average variable mortgage rates continue to hover around 6.3% with the majority of banks not expecting the next cut until the February 2026 meeting. Property market commentators, including the banks, predict average housing prices in Sydney to rise 4.8% in 2025 and 7% in 2026. Although the Consumer Confidence Index (CCI) for Australia is 99.6, indicating a neutral to slightly optimistic outlook, which supports stable enrolments, families will remain cautious about discretionary spending.

These trends provide important context for school budget planning, funding estimates, and community engagement in the year ahead.