THE Island recorded its lowest inflation rate in more than three years at the end of 2024, newly released statistics have revealed – but Jersey’s Consumer Council has warned that Islanders are not yet “out of the woods” following recent price hikes.
JCC chairman Carl Walker cited increased electricity, gas and water costs implemented this month and stressed that, despite inflation continuing to fall in the final quarter of last year, “times are still hard”.
He spoke after Statistics Jersey’s latest Retail Prices Index report, published yesterday, showed that during the 12 months to December 2024 Jersey’s RPI had increased by 2.5%.
While this means costs are still rising, it marks a continued drop from the rate of 3% documented in the previous quarter and the 5% figure reported in July.
It is also the lowest figure recorded since March 2021 (0.8%).
Changes in a number of spending areas have contributed to the overall decrease in the Island’s rate of inflation, including housing, which saw prices rise by 0.5% overall, compared with an increase of 0.8% over the same period of time to September 2024.
According to the the Statistics Jersey report, this change was “mainly driven by decreases to mortgage interest rates”.
However, mortgage consultant Peter Seymour questioned the figure – noting that, following the Bank of England base rate falling to 4.75% at the end of last year, “most lenders in Jersey and the UK have reacted by putting their rates up”.
“They put them up because they anticipate that markets in the short-to-medium term are going to show an increase in the cost of borrowing rather than a decrease. This is driven by swap-rates, which are the rates bank pay for the money they then lend out to consumers.”
However, he also said it was “likely that there will be some downward movement in interest rates”.
“This could translate into lower fixed-rates during the first half of the year. The Monetary Policy Committee of the Bank of England, meets in February for the next review of base rate. Indications are that the Bank will continue with cuts this year, although markets think that there will be fewer, perhaps only one, so reducing base rate at 4.5%.”
Meanwhile, Mr Walker said it was “encouraging” to see the Island’s rate of inflation come down, but expressed “caution” in light of several utility cost increases that took effect this month.
“Energy and water bills have all gone up by around 7%, which will hit household pockets and won’t yet have filtered through into the RPI data. Those energy [price] rises will take time to filter through and essentially impact everything that we consume, right up to the cost of services,” he explained.
“I don’t think we’re quite out of the woods – times are still hard and, importantly, wages never matched those incredible double-digit inflation rates we saw a couple of years ago. So we are still less well-off in our pockets.”
