Last week, the Average Earnings report published by Statistics Jersey revealed that the average pay rise in the Island was 3.5 per cent over the past year.
Wages trailing behind the level of inflation – 4.5 per cent – means that Islanders have less spending power than they did 12 months ago.
Greg Boyd, a senior economist who works for the States, said that the rising inflation rate was largely due to increased housing and fuel costs and was unlikely to subside in the near future.
Meanwhile, the House Price Index report produced earlier this month revealed that the price of a home in Jersey rose by six per cent over the past year.
Deputy Kirsten Morel, chairman of the Economic Affairs Scrutiny Panel, said that the trends were ‘really concerning’.
He added: ‘People could end up trying to find somewhere else to live [outside Jersey] if they are struggling to support themselves and they are spending a lot of money on housing costs.’
He added that while external factors that were driving up inflation, such as rising oil prices, could not be controlled, the States needed to review how housing costs were dealt with.
Although the States-owned social housing developer Andium Homes is planning to build 2,000 more homes in the Island by 2025 in a bid to provide more affordable housing, Deputy Morel said the level of construction work in Jersey as a whole was not enough and other avenues to control housing costs needed to be explored.
‘They are sticking to the free market model of increasing housing supply to lower prices but it isn’t working,’ he said
‘It is taking too long to build homes and it always does in a place like Jersey, where people are very sensitive about planning controls and you have limited space.
‘For this to be effective we would have to be building far more than we are at the moment.
‘What we need to be looking at is other options such as rent controls, a land value tax or an empty property tax. We need to do a proper analysis of these.’
He added: ‘We could apply more immigration controls, but that would have a negative impact on our economy because we need skilled people to come and work here.’
An e-petition was launched last week by Islander Jan McAllister calling for caps to be placed on rents.
