ISLANDERS have been warned to brace themselves for inflation rate spikes amid global uncertainty – despite recent figures steadily declining.
The trend for inflation seen over the past 18 months, including a fall of 0.1% for the rate at which prices have increased in the latest data, may not be maintained over the coming months, according to the chief economic adviser Thomas Holvey.
The war in the Middle East, which began on 28 February, had limited impact on the inflation figure for the first quarter of this year, but this may change as the year moves on, experts have warned.
The figures from Statistics Jersey show that prices were 2.7% higher at the end of March than at the same point a year ago, with the rate dropping by 0.1% compared with the 2.8% headline figure for the final quarter of 2025.
Statistics Jersey said: “This conflict has resulted in a number of economic impacts, including observed changes in the price of energy products such as heating oil and petrol. However, the timing of the RPI price collection has meant that only some of these impacts will be reflected in this quarter.”
Mr Holvey, said: “Today’s fall in inflation is welcome and reflects the position that was expected before the Middle East conflict – since then, global pressures have led to increases in petrol, diesel and heating oil prices around the world.
“Looking ahead, there is still likely to be an increase in general prices in coming months but Jersey remains in a relatively fortunate position, with our electricity sourced from a stable market and less reliance on heating as we move into the summer months.”
Given that food and fuel were the areas showing the most significant inflationary pressures, Mr Holvey said that Islanders should “shop around” in order to find the best value for such commodities.
“The Jersey Consumer Council and its [prices.je] shows large disparities in prices across the Island, such as 20 pence per litre difference between the cheapest and most expensive petrol,” he added. “The site is a valuable resource for consumers.”
After a significant spike during 2022 and 2023, peaking at 12.7% in March 2023, inflation has been fairly steady in Jersey since a figure of 3.0% was announced for the third quarter of 2024, with the rate fluctuating only slightly – between 2.3% and 2.8% – over the next six quarters.
Jersey’s situation is slightly different to the UK, where latest figures have shown inflation rising to 3.3%, largely due to higher fuel prices.
It comes shortly after the government faced calls to cut fuel duty in light of the increases in oil prices. At the time, Chief Minister Lyndon Farnham told the JEP that the Emergencies Council were continuously “monitoring how changes in oil prices are beginning to affect the cost of living”.
Island Energy also increased gas prices by 5% temporarily on an average home’s tariff as the ongoing conflict continues to impact the cost of living globally.
Experts have referred to the Bank of England’s ambition to get inflation down to its 2% target and keep it there. Ahead of the start of the war on 28 February, with inflation set to dwindle, interest rate cuts seemed to be on the cards, but it now seems likely that the Bank’s Monetary Policy Committee will keep rates at the existing figure of 3.75% when it is published next Thursday.
Thomas Pugh, chief economist at RSM UK, said the result of the meeting looks “nailed on”.
He said: “The Bank of England will almost certainly hold interest rates at 3.75%, most likely in a unanimous vote again.
“The picture of the war in Iran is little clearer than at the last meeting and the value in waiting for more information is significant, given the uncertainty over both the future direction of energy prices and their impact on the economy.”
