The newly published retail price index for December was 3.9%, which was lower than the September rate of 4.3% but almost double the equivalent UK measure of 2%.
Economic Affairs Scrutiny Panel chairman Deputy Kirsten Morel said that the figures were ‘very concerning’ and ‘strengthened’ public sector workers’ claims for better pay rises. He plans to launch an official investigation into the matter.
National Education Union in Jersey president Brendan Carolan, an economics specialist, blamed the figures on ‘political incompetence’ and said that he felt public sector workers were ‘bearing the brunt’ of the alleged failings.
Jersey’s RPI, which is measured by surveying the price increases in a ‘basket’ of goods and services, has been consistently higher since 2017 after remaining at historically low levels for a number of years.
According to the latest RPI report, produced by Statistics Jersey, the biggest driver of rising prices was housing having increased by 5.6% over the year, contributing 1.1% to the overall rate of inflation.
The report says: ‘The key drivers were rents in the private sector and the increased cost of house purchase, the latter due to the higher mortgage interest payments following the increase in the Bank of England base rate in 2018 and residual effects of the rate rise in November 2017.’
Other areas which saw significant cost increases were household services, leisure services, motoring and fuel.
Deputy Morel said that he was planning to speak to the Chairman’s Committee about launching a review of the cost of living in Jersey.
‘It is very concerning. People are already concerned about the cost of living here and now we are finding ourselves in a position where it is increasing at double the rate of the UK,’ he said.
‘And when you look at the breakdown you see it is because of things like housing costs and household services, which we have levers to deal with locally.
‘You can’t blame that on exchange rates and Brexit and you have to think that our government and regulators could be doing more to control prices.’
He added: ‘The main issue is housing and, with a growing population, if you don’t build more homes, then prices are going to go up. The States need to get a grip on this.
‘For household services, the government has some control over the utility companies also, so could use its levers there.’
The start of the year has seen hundreds of public service workers taking industrial action or vote in favour of strikes, owing to dissatisfaction at below-RPI pay awards for 2018 and 2019.
Deputy Morel said that the latest figures vindicated their argument.
‘Although the RPI has gone down slightly, the figure is still high. This strengthens the argument of the public sector workers and weakens that of the government,’ he said.
‘Some people have cynically suggested that cutting public sector pay is a lever to control inflation [by reducing the amount of money in circulation] but I do not agree with that.’
Mr Carolan, whose union members recently voted in favour of strike action, added that he believed ‘political incompetence’ in Jersey was causing the high inflation rate
‘When we drill down into the components of RPI the proportion from increased housing costs is a real issue for my members and may actually distort upwards the true rate they are experiencing,’ he said.
‘A comparison to Guernsey and the UK does really illustrate where the economic management of Jersey is failing and the political incompetence that exists.
‘Increased rental costs are causing many teachers to move to cheaper accommodation on a fairly regular basis and this is massively unsettling.’
He added that he believed the States were trying to cut public sector wages to control inflation.
