Carl Walker, chairman of the Jersey Consumer Council, has said the Island is facing the ‘perfect storm’ of fracturing supply chains, Brexit bureaucracy, higher postage costs, the loss of GST exemption on online goods and customers being less willing to browse in shops and compare prices due to the pandemic.
Economic Development Minister Lyndon Farnham said that he would support the council running such a site and that he planned to reconvene the government’s Inflation Strategy Group this summer to tackle the issue of rising costs.
Last week it emerged that, due to Brexit and Covid disruption, the cost of some building supplies has increased by 50%, while many retailers, such as clothes and furniture stores, are experiencing lengthy backlogs on orders.
Mr Walker said that work carried out by the council had determined that prices increased on an average basket of supermarket goods by 4.5% in Jersey over the last year.
He added that he feared that government plans to remove the Island’s GST de minimis limit – which exempts imported goods worth less than £135 from the sales tax – could force online retailers to pull out from Jersey altogether, creating further supply shortages and price rises.
‘In terms of Brexit, one of the big things is postage at the moment. If you were to try and post, for example, a birthday card from Jersey to France or Germany, you can pay an extortionate amount because it’s seen as entering the EU,’ he said.
‘Because of this there’s a lot of online retailers that have already stopped supplying Jersey. Then we’ve got hanging on the horizon the move to lower the de minimis level. We’re really worried about the impact of that.
‘People have had a tough time with Covid already and GST is regressive, so it’s going to really impact the lowest-earners. Plus there’s also a real risk that larger retailers are not going to change their billing systems to accommodate Jersey’s 5% GST.
‘For the likes of Amazon and other big retailers, Jersey must make up a tiny fraction of their global sales and they may decide to just stop supplying the Island altogether, because it’s just easier to do that. And the smaller retailers, who often supply specialist goods, may just simply find it too difficult to charge GST, and you could lose them as well.’
Mr Walker said that he felt that Jersey could be at particular risk to price rises as a ‘captive market’ island economy and now was the time to establish a price comparison website to address the issue.
‘I fear consumers are in for a very tough year ahead because the true impacts of all of these different things seem to be coming to a head at once,’ he said. ‘As an island we are particularly exposed to a lot of this. There’s a real risk that we’re in an upward spiral and we need to do something to stop it because we’re in a captive market and in some industries there’s very little competition in Jersey and the prices only ever seem to go one way.’
He pointed to the success of previous price-watch campaigns he had overseen while working for the JEP, which Statistics Jersey have credited with helping to control inflation, and said that the Covid crisis had heightened the need for this.
‘With Covid, people are a bit more wary of shopping around and browsing. So they’re not looking and they’re not as price savvy as they were,’ he said.
‘While that isn’t the retailer’s fault, there’s a risk retailers become complacent and you see unnecessary price rises. An Islandwide price comparison service would help stimulate competition and transparency and awareness.’
Senator Farnham said that he was interested in discussing Mr Walker’s ideas with him and was taking steps of his own to address looming inflation.
‘Jersey imports 90% of its goods and inflation in the Island is generally in line with the UK,’ he said.
‘High inflation is being forecast due to Brexit and Covid and we need to be ready to tackle that, so I am going to reconvene the Inflation Strategy Group this summer.
‘I would also support the Consumer Council, which we fund, setting up price comparison websites. The best way we can address inflation in the private sector is by promoting competition and price comparisons.’
