INFLATION remains at 4.9%, still higher than Jersey’s 4.5% and the UK’s 4%. The Retail Prices Index increase for 2007 was the same as for the 12 months to the end of September.
When that figure was released Treasury minister Lyndon Trott thought it might have peaked.
‘We believe that this figure is probably topping out and will come down,’ he said at the time.
And Guernsey’s RPIX - inflation excluding mortgage interest payments - is 1% higher than last quarter at 3.9%.
Jersey’ s latest inflation figure is its highest for nearly three years and RPIX there stands at 3.2%.
Deputy Trott remains optimistic.
‘Although the headline rate has not fallen this quarter, it is somewhat reassuring to see a rise in the figures for Jersey and the UK,’ he said yesterday.
‘We were out of step with their trends in the last quarter, which was a worry. Now at least we are on a more even keel with our key competitors.
‘There are a number of interesting components in the latest RPI figure of 4.9%. Most notable was the impact of an interest rate cut from the Bank of England.
‘Continuing cuts in interest rates are still widely forecast throughout 2008, which gives us reason for confidence that inflation could well fall.’
The housing group, which has the largest weighting within the index, contributed 1.9% of the 4.9% overall annual increase, which is 1% less than last quarter.
The Bank of England interest rate was reduced during the quarter, lowering the mortgage costs. This helped offset increases in other areas of the housing group.
‘From a purely housing perspective, the high RPI figure comes as no real surprise,’ said Swoffers director Spencer Noyon.
During 2007, a record number of local and open market properties was sold.
Record prices were achieved on the open market and the local market saw more £1m.-plus homes sold than ever before.
‘All of this would undoubtedly have helped contribute to the overall high level of inflation,’ said Mr Noyon.
He believes the housing group’s contribution to the RPI figure falling by 1% on the previous quarter reflects the quiet period experienced by estate agents in the run-up to Christmas.
The start of 2008 is clouded slightly by worldwide financial instability but since children have returned to school, agents have seen a marked increase in valuations, new instructions and viewings, he said.
‘All of these suggest that people are still prepared to move house now, albeit with a view to treating their new property as a home rather than a financial asset which will generate double-digit growth,’ said Mr Noyon.
Annually the alcoholic drink group rose by 8.4% - the largest percentage rise during the 12 months.
Jersey’s Treasury minister Terry Le Sueur blamed rises on factors outside the island’s control: interest rates, fuel prices and rising food costs.
Article posted on 24th January, 2008 - 12.00am
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