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Local price rises hit 30-year high

Local price rises hit 30-year high

Tuesday 26 July 2022

Local price rises hit 30-year high

Tuesday 26 July 2022


Prices in Guernsey rose 7% in the past 12 months - the highest rate of inflation locally for more than 30 years.

The States published the latest figure this morning with a warning to the island to expect even higher price increases later this year.

At the end of last year, before Russia's invasion of Ukraine and disruption to the supply of basic commodities, the States' central forecast for inflation was that it would be around 3% by now. The RPIX figure of 7% and the RPI figure, which includes mortgages, of 6.8% are greater than even outside forecasts produced at that time but since revised significantly. 

The States said today that the increase in the rate of inflation "continues to be driven by rising energy and fuel costs, largely as a result of the war in Ukraine" and that "high housing costs, driven by high demand and a lack of availability, are also a key factor in the local inflation figure, and addressing housing is a top priority for the States".

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Pictured: The price of grain has increased substantially since war broke out in Eastern Europe and this is among many factors contributing to rising food costs.

The Policy & Resources Committee's Treasury Lead, Deputy Mark Helyar, acknowledged the increasing pressure on the cost of living but predicted that the rate of inflation would start to fall again in the near future.

"These levels of inflation are significantly higher than that which we’ve experienced in recent years. They reflect the major international events still happening around us, but they have a very real impact on many people’s finances," said Deputy Helyar. 

"For public finances, higher inflation will mean more cost in some areas, but it will also mean increased revenues in others, such as document duty from house sales. We’re fortunate we’ve built up some reserves to give us resilience in the face of any short-term surprises.

"Ultimately, we still expect this to be a temporary period of higher inflation and for these figures to start coming back down in a matter of months."

Earlier this month, Express reported on the results of a survey which found that around half of 1,200 respondents found it difficult to meet living costs in the past 12 months. 

Ahead of publication of the latest inflation figures, Express asked whether the Policy & Resources Committee had any plans to set aside additional financial support to help islanders cope with higher and increasing rates of inflation and, if so, in what ways and how much.

Deputy Helyar said the Committee "will continue to monitor the impacts of the cost of living" and is "pushing on with the priorities in the Government Work Plan, which will help in some areas, such as housing".

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Pictured: Deputy Mark Helyar, the Policy & Resources Committee's Treasury Lead, expects some relief from increases in inflation "in a matter of months".

The Committee for Employment & Social Security, which is responsible for social welfare and social housing, is not proposing any immediate changes to benefit or pension rates in light of the rise in prices announced today, but said it may need to if the rate of inflation does not slow soon.

"No figure has been determined in this respect, but if inflation continues to climb it is something we would need to discuss and on which we would need to consult with Policy & Resources," said Deputy Peter Roffey, President of the Committee for Employment & Social Security.

"Of course, the current high rate of inflation is a significant concern to everybody..it is causing great difficulties to many islanders. The more modest your income, the more impact price rises have on the affordability of a decent lifestyle.

"As the mandate of Employment & Social Security includes trying to ensure that those on low incomes are included in the normal life of the island, the current cost of living crisis is a particular concern to my Committee. Feedback from more than one third sector organisation has confirmed our own concerns about the impact of rising prices on low income households.

"We don’t have any new schemes planned but we do intend to fully factor in the rise in prices when proposing the annual changes in requirement rates under the existing Income Support scheme. We will also be proposing some tweaks to that scheme to provide extra help where it is most needed.

"Meanwhile we will be proposing that the real value of the States' pension is at least maintained. That debate is due to happen in October with the debate on Income Support rates one month later."

Deputy Peter Roffey

Pictured: Deputy Peter Roffey's Committee for Employment & Social Security will be under the spotlight when it proposes changes to benefit and pension rates this autumn, by which time inflation is expected to have climbed even higher.

For a decade, inflation in Guernsey was contained to less than 3% until it started to climb significantly around the turn of the year.

Annual inflation in the UK reached just under 12% at the end of June. In Jersey, RPIX is now 6.5% - lower than in Guernsey - but RPI is higher at 7.9%.

"To see it remain lower than the levels the UK is seeing, now in double figures, is at least a bit of good news," said Deputy Helyar.

Deputy Roffey said: "It is a relief to see the cost of living going up somewhat more modestly than in the UK."

READ MORE...

Survey finds half struggle to meet living costs 

Annual inflation highest since 2008

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