Food prices drive inflation to five-year high
INFLATION reached its highest level in more than five years in Jersey last month, with the price of food notably increasing and Brexit the likely cause, new statistics have revealed.
The retail price index for the Island was 3.1 per cent for the year up to September 2017, which was exactly the same rate as the comparable inflation measure in the UK and the highest level for Jersey since March 2012.
States senior economist Greg Boyd said that the increase in price hikes was probably due to the fall in the value of the pound after the UK voted to leave the EU last year, which has led to increased import costs.
Jersey’s RPI, which is produced by the States Statistics Unit, is calculated by taking an average ‘basket’ of goods and services and recording how their cost has changed over a period of time.
The increased inflation levels were driven mainly by rising costs of household services (7.8 per cent) – including school and university fees, postal charges, telephone charges and domestic services – and motoring costs (4.4 per cent), which were largely driven by the increasing price of oil.
The increase in the cost of food (2.5 per cent) was the highest level recorded since March 2014, which bucked the general trend of decreases in food prices during 2015 and 2016.
The report notes that higher prices were seen for fresh vegetables, cereals, bread, milk, biscuits and cakes, sweets and chocolate, and tea and coffee.
‘Sterling has fallen ten per cent since the referendum and it is starting to take effect,’ said Mr Boyd.
‘The rate is pretty much in line with what the Fiscal Policy Panel [an independent body of economists which advises the States] predicted. So it’s no surprise to us,' he added.