ISLANDERS already struggling with the spiralling cost of living may face more misery as Jersey’s inflation rate increased to 12.7% – a figure not seen since the 1980s.
The primary drivers behind the shocking figures – released yesterday by Statistics Jersey – were housing costs, which had increased by 24.4% over the previous 12 months, and food prices which had risen by 14.2%.
Every single economic factor went up according to Statistics Jersey, with the cost of heating and lighting properties seeing a 22.7% increase while motoring costs grew 12.3% this year.
Islanders in groups already hardest hit by the rising cost of living will face further difficulties, as inflation for pensioner households and low-income households went up by 10.3% and 8.5% respectively.
This is the largest increase in RPI Pensioners and RPI Low Income since December 2007, when these specific price indices were introduced in Jersey.
Economic Development Minister Kirsten Morel said that the ‘headline figures are not pleasant but not unexpected’. He added that while it was ‘obvious that prices are increasing in the island’, the ‘RPI figures are not telling the full story in Jersey’.
He said: ‘The largest component of the increased inflation is interest rates. However, this only directly affects homeowners without fixed-rate mortgages.’
Deputy Morel said that the government would ‘continue to watch’ the impact of inflation but confirmed that there would be ‘no knee-jerk reactions’.
He added that he would be chairing a cost-of-living meeting next week, which would ‘review’ areas including the package of measures announced in the government’s emergency ‘mini budget’ last year, which included tax threshold rises and increases to benefit payments.
The budget also included a cut of 2% in Social Security contributions. However, this reduction was only temporary and ended on 31 December 2022.
Social Security Minister Elaine Millar said that it was unlikely that a similar reduction would be introduced in the near future as ‘the changed tax allowances will counterbalance the return to normal contribution levels from January’. However, she added that this would be kept under review.
Jersey’s inflation rate has been rapidly increasing since September 2021 – when it stood at 2.9% – and the latest statistics have prompted fears that already-struggling Islanders may need further government support to help them through the cost-of-living crisis.
Jersey Consumer Council chairman Carl Walker said: ‘Experts seem to be suggesting that prices may have peaked. Whether that is true I do not know but inflation is still astronomically high and this demonstrates that Islanders are still going to need help into the summer.’
Mr Walker noted that recent hikes in the cost of electricity and milk, which he described as ‘two staples of everyone’s budget’, were yet to be reflected in the RPI figures.
‘We have also seen some big pay rises in the public sector that could potentially be reflected in the private sector, meaning that companies may need to raise prices,’ he continued.
‘It may well be the case that the government needs to extend some measures – such as the reduction in social security – to help Islanders get through the winter.’
Last year, the Fiscal Policy Panel predicted that inflation would peak at 12% by the end of 2022, before falling back to a forecast of 2.4% over the four-year ‘horizon’ period.
There have been signs in the UK that the inflation rate may be starting to taper off, with Bank of England governor Andrew Bailey stating that a ‘corner has been turned’ and that inflation could ‘fall rapidly’ following a slight drop in the UK’s latest figures.
Earlier this week, Guernsey’s RPI was confirmed as having increased by 8.5% at the end of last year.
