GUERNSEY’S rate of inflation remains negative – but is predicted to rise above zero over the next quarter.
At the end of last month, Guernsey RPI was at -1.2%, compared with -1.3% at the end of June.
Island pay negotiations are frequently based on the September RPI figure.
States economist Andy Sloan said the figures were what they had been expecting.
‘We expect to see it go back to positive next quarter,’ he said, adding that decreasing mortgage interest rates had caused the volatile RPI figures over the past 12 months.
This time last year, it stood at 5.9%.
Housing contributed the largest decrease of -2.5% in the last quarter, -10.8% over the year.
‘Those who have been on a variable mortgage have had a bit of a “Brucie bonus” over the last few months,’ said Mr Sloan.
Clothing, fares and other travel and leisure goods also contributed to a negative RPI – which has been consistent throughout 2009.
Household services and alcohol groups contributed the largest increases.
Guernsey’s RPIX, the island’s core inflation rate excluding mortgage interest payments, was up by 0.3% on last quarter, at 2.4%. That compares with 1.1% in the UK.
‘Our core inflation is still higher than in the UK, which is not something we should be happy about,’ said Mr Sloan.
He added that RPIX was approved in July as a preferred measure of inflation when it came to States policy-making decisions.
Public Services Remuneration Committee chairman Allister Langlois said RPI was not the only consideration when deciding pay.
‘Inflation figures are just one part of negotiations. We are living in strange times and the difference between RPI and RPIX is going to converge again soon,’ said Deputy Langlois.
Guernsey RPI is calculated on the price change of items within a ‘shopping basket’.
The basket represents what a typical household in the island would spend its money on and contains over 2,000 items. These remain the same every quarter and range from a loaf of bread to a new car.
Article posted on 22nd October, 2009 - 2.29pm
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