This Is Guernsey

By Zoe Ash

RISING inflation means islanders will have to continue tightening their belts.

The latest RPI figure, released yesterday, shows a rise to 5.8%, the highest since September 1991. At the end of June the figure stood at 5.5% with the previous quarter, at the end of March, at 4.8%.

The rising cost of food has contributed most, making up 1.1% of the overall increase. Housing followed and at 1% made up the largest amount to the quarterly rise.

Treasury minister Charles Parkinson (pictured) said he was expecting inflation to keep rising towards the end of the year in line with the predictions of the Bank of England. ‘We are hoping it will fall in 2009 as forecast.’

He said most of the cost was incurred through importing goods to Guernsey.

‘We would like the island to be more self-sufficient, especially when it comes to food. We are trying to keep the agricultural industry viable but there is only so much we can do,’ he said.

Guernsey’s RPIX, inflation excluding mortgage interest payments, was 6.2% in the last quarter, a rise of 1.9% compared to the end of March.

Over the same period, the UK saw a 2% rise and Jersey 3.8%.

This indicates that basics such as food and fuel continue to rise in price.

Inflation has doubled in Jersey, up 3.2% to 6.4% in six months, but that takes into account the addition of a goods and services tax in May.

The UK rate is 5.2%, but Deputy Parkinson said it was difficult to compare our RPI to that of the UK, which did not include anyone over 65 or the top 4% of high-earning households.

Paul Luxon, president of the Chamber of Commerce, said consumers were showing cautious constraint.

‘Feedback from Chamber members indicates Guernsey is tightening its belt.’

He said RPI figures should not be seen as having a major significance as they were fickle and susceptible to erratic prices such as those seen recently in the oil industry.

‘We shouldn’t be scared by this rise. The reality is that significant one-off factors have a real effect,’ he said.

Stabilising interest rates combined with the fact that Guernsey is a small location with low employment and high shipping costs meant consumers should not panic.

‘The view from most people is that quarter four of this year and the first quarter of next year will see a considerable drop. This figure will start to come down as a result of the credit crunch,’ he said.

In September, States manual workers were awarded an above-RPI pay rise for this year of 5% by an independent panel following a long-running pay dispute.

The 2009 pay talks are already under way.

Unite regional industrial organiser Ron Le Cras said: ‘The high RPI figure which has come out obviously affects low-paid people and that will reflect in any claim we put forward for public sector employees for 2009.’

Article posted on 25th October, 2008 - 9.29am