GUERNSEY’S economy shows no sign of recovery, according to inflation figures released yesterday.

In March the island’s economy shrank for the first time since records began and now that trend has continued with the retail price index – which measures a ‘shopping basket’ of living costs – standing at -1.3% for June. Deflation can in the short-term lead to cheaper prices but in the longer term can bring a fall in the value of assets, affect wage settlements and cause job losses.

However, while the news signalled the island had witnessed deflation for the second quarter in a row – the latest figure dropping from -1.2% in March – (and from 5.5% at the end of June last year), local experts have pointed to the good news about the data.

The RPIX figure, which takes housing expenses out of the overall cost of living calculation, stood at 2.7% – a drop on the previous 3.3% recorded at the end of March – as well as on the 5.4% figure from this time last year.

Yesterday Chief Minister Lyndon Trott (pictured) once again urged islanders to focus on this latest RPIX figure, which he described as ‘core inflation’.

‘I think today’s inflation figures are reassuring,’ he said. ‘Inflationary pressures in the economy have eased. Core inflation has fallen to around 2.7%, which is slightly below our proposed target in the Fiscal and Economic plan.

‘Importantly, food inflation is around 3%.’

According to Deputy Trott, States figures suggest the outlook for RPIX over the next 12 months will be ‘a continuance of a reasonably benign picture’.