THE Island is ‘far from through the worst’ of the cost of living crisis, the head of the Consumer Council has warned – after new data showed Jersey has been hit with a rise in the rate of inflation not seen for more than 32 years.
Statistics Jersey’s latest Retail Prices Index report, which measures the change in the price of goods and services purchased by an average household, showed the annual rate of inflation at 10.4%.
Consumer Council chair Carl Walker said the rise confirmed ‘what we saw coming – the cost-of-living crisis is deepening’.
The new figure is more than 2% higher than the inflation rate recorded in June, and the largest 12-month jump since September 1990. It is also greater than the UK’s rate of 10.1%.
‘We have reached a point where Jersey can do very little about the root causes such as the impact of Brexit and the war in Ukraine.
‘We are far from being through the worst of it,’ Mr Walker added.
The increase was mainly driven by housing – which rose by 15.9% – particularly due to the growing costs of mortgage-interest payments over the last three months. Energy (fuel and light) and motoring grew by 25.1% and 12.9% respectively.
Assistant Treasury Minister Richard Vibert said: ‘The high inflation figure announced this morning will clearly be worrying for Islanders and we shouldn’t underplay that.
‘However, the high figure wasn’t wholly unexpected, and we took the possibility of such a rise into account in designing the scale of measures within the recent mini-budget.
‘It is also important to recognise the inflationary pressures in the headline rate includes mortgage interest rates that have risen recently.
‘Thankfully, these rises won’t actually be felt by many Islanders at the moment who either rent their home or are still locked in to fixed-term deals.’
He added that the government would monitor the situation ‘closely’ and was considering further support measures ‘where necessary’.
‘However, we should also be aware of the damage that can be done by the wrong interventions at the wrong time and ensure our actions are affordable and promote stability,’ he said.
Housing Minister David Warr said he was ‘surprised’ that the impact of the changing interest rates was already apparent.
‘It does reflect the levels of borrowing and mortgages in the Island, but the next quarter could be very telling [in terms of] whether we see reduced levels of lending,’ he added.
‘The market is extraordinarily dynamic at the moment and it is going to be a choppy ride, but we are in conversation with the banks about what they are seeing, so that we have a heads-up and can react appropriately to what is happening.’
Mr Walker said that the issue was likely to be ‘compounded’ as Islanders tightened their budgets going into the winter months.
‘Consumer spending is going to slow down massively as people are fearful of their heating bills and other energy costs,’ he said.
‘The unintended consequence could be that the high street is in for a rough ride as we reach that crucial period just before Christmas.’
Meanwhile, Shelter Trust chairman Neville Benbow said: ‘We have for a long time said that the cost of living – or surviving – in Jersey is higher than in the UK.
‘When you look at the price rises on everyday items it is not surprising that we are seeing an RPI rate of more than 10%, but it is concerning for anyone who is on a constrained budget.’
Echoing Mr Walker’s comments about winter energy bills, he warned that some Islanders might be tempted to go without heating in order to save money for other necessities like food.
‘The danger is that when things are tough, people have to make tough choices,’ he added.
In August, the government unveiled a £56.5 million package of proposals – include benefit increases, cuts to social security contributions and higher tax breaks – as part of a mini-budget designed to put more money back into Islanders’ pockets.
Commenting in the possibility of further measures being introduced, Mr Benbow said: ‘It is critically important that the government keeps a close eye on this and addresses any pockets of poverty that arise from this general increase in costs.’
He noted that there was ‘no silver bullet’, but added he was hopeful the Council of Ministers would act ‘where needed’.
Salvation Army officer Richard Nunn said Islanders shouldn’t hesitate to seek assistance from charities and other organisations if they need it.
‘There are so many charities out there that are ready to either help practically or advise where you can get support – so if you are struggling, reach out.
‘We all have times when we need help and we all have times when we can give help, so don’t be embarrassed or afraid or ashamed,’ he added.
Statistics Jersey’s report also showed that the inflation rate for pensioners and low-income households had increased by 9.5% and 7.9% respectively.
Ben Shenton, the chair of Age Concern, said: ‘Older people spend a greater-than-average proportion of their income on essentials such as energy and food, and their living standards can fall markedly in times of high inflation.
‘Whilst higher inflation is a global problem, it is concerning that more is not being done at a local level to minimise the detrimental impact.’
He added that rental and food costs were continuing to rise – and that there had been ‘little government action to help the majority’.
‘At Age Concern Jersey we are endeavouring to keep the cost of our meals low, and the quality high.
‘This will be through increased subsidies funded through the generosity of Islanders.
‘Most pensioners are quite stoic regarding the increase, as they have seen it all before.’
