MINISTERS presenting the various elements of Guernsey’s new look States Strategic Plan – the successor to the Government Business Plan – didn’t make much of it, but a key part of the island’s economic direction hinges on an anti-inflation strategy.

In turn, since the island cannot set interest rates, the success of that strategy depends on getting local businesses to lower their prices and employees to accept pay rises of less than the full cost of living.

It is, by any standards, a tall order.

The Policy Council is right to highlight the need for Guernsey to maintain its competitive position if it is to flourish as an international financial services sector, enjoy sustainable growth, and maintain full employment.

However, seeking to establish an annual inflation target of 3% (based on the RPIX figure which excludes housing costs) is a bold step – and certainly challenging.

The average household already spends more than £250 a week in this area, which makes up more than a third of the RPI index.

Persuading islanders to ignore that when pay bargaining will be difficult, as the unions have already indicated in our page one piece today.

In part, that is because the RPIX figure does not simply remove mortgage payments. It also ignores rents, household improvements, DIY projects, property tax, rates, sewage costs, water charges and insurance.

The States Strategic Plan partly acknowledges the difficulty inherent in changing the way islanders regard the RPI figure when it says that ‘a key component of the strategy is the regulation of competition’.

In other words, it is more likely to achieve success in regulating businesses and dropping prices that way than by getting people to buy into pay rises based on a lower, but less volatile, inflation index.

In turn, that suggests the level of scrutiny local commerce will come under will be rather more than the light touch the report promises.

Commerce and Employment would not discuss its intentions yesterday but the States Strategic Plan report indicates that this new level of bureaucracy will cost £400,000 a year.

What it now has to demonstrate is that yet another quango will be worth it.