Annual inflation highest since 2008

Friday 22 April 2022

Guernsey's most senior politician called on States' members to keep inflation "at the front of our minds in the decisions we make over these coming months" after it was announced this morning that prices in Guernsey have risen nearly 6% in the past year.

Deputy Peter Ferbrache, the President of the Policy & Resources Committee, assured the island that the States are "watching what’s happening to prices and the cost of living for islanders very carefully".

"While we’ve so far been better placed than the UK and many other jurisdictions to withstand the global pressures that are driving prices up, it still has a very real impact for islanders who see and feel it in their household bills," said Deputy Ferbrache.

He said that the States "cannot control all the factors affecting prices but we can influence some of them".

Pictured: Deputy Peter Ferbrache said he expected the States to do what they reasonably could to alleviate increases in islanders' cost of living.

The latest inflation bulletin released by the States - which can be read in full HERE - shows that the basket of goods used to measure retail price inflation increased by 5.9% in the 12-month period ending 31 March this year.

This means that inflation is now higher than it has been at any time since 2008, although the States pointed out that inflation in Guernsey "remains substantially lower than the UK, where the equivalent measure has reached 9.1%".

"Price inflation in Guernsey has been driven upwards primarily by costs of housing, domestic heating fuels, holidays outside the Channel Islands and motoring increasing significantly over the past year," said the States.

"There have been increases across all of the groups used in the inflation calculations, creating general upward pressure. In particular, prices are being driven up by problems with global supply chains and disruption to energy markets as a result of the war in Ukraine.

"However, the impact is less here compared to the UK because of Guernsey’s connection to the French electricity grid which has a high proportion of nuclear power, and our warmer climate and smaller geographic size."

The States said that measures taken by the Bank of England should see inflation "start falling later in the year". But they also warned that, like the UK, Guernsey is likely for some time to continue experiencing higher rates of inflation than islanders have been used to in recent years.

Pictured: Deputy Peter Roffey said that his Committee, which is responsible for schemes of financial assistance to less well-off islanders, expected inflation to remain relatively high for some time.

Deputy Peter Roffey, President of the Committee for Employment & Social Security, said: "We understand that sharp increases in the cost of living put real strain on the budgets of those on lower incomes.

"The Committee for Employment & Social Security will be monitoring the situation as these higher than normal inflation levels are expected to continue for some months."

Deputy Ferbrache said the States must continue to plan for long-term changes alongside reacting to short-term fluctuations in inflation.

"We must...separate out this rise in inflation, which we don’t expect to continue in the long-term, with some of the planning we must do for the provision of essential services in years and decades to come," said Deputy Ferbrache.

"We’re still set to see the significant changes to the make-up of our population, so that remains a serious challenge we must address."