'People are struggling' as inflation hits 4.6%

PRICE inflation in Guernsey has hit its highest level for 13 years, with goods and services now costing 4.6% more in December than they did a year earlier.

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The quarterly figure is the third-highest this century, with the only two higher figures occurring during the global financial crisis of 2008.

The new Guernsey RPIX rate, published yesterday, which excludes mortgage interest payments, is higher than Jersey’s 3.5%, but considerably lower than the UK’s 7.7%.

The full RPI rate for the island is 4.4%, 3.8% in Jersey and 7.5% for the UK.

A rise in inflation had been widely trailed and will come as little surprise to many, with Brexit and Covid pressures aggravating staffing problems in the island, and overheating in the local construction sector in particular.

States senior economic and policy analyst Liz Laine said while inflation had risen above levels seen in recent years, it was not as high as that seen in the 1970s, 1980s and early 1990s.

‘This increase is driven by the extraordinary events of the past couple of years and is being felt in most countries,’ she said.

‘The pandemic has had a huge impact on global supply chains, which means that shipping costs have increased.

‘This impacts the price of anything that needs to be transported, from Spanish tomatoes to Japanese electrical goods.

‘The effects of Brexit on the movement of goods will be felt here too. As economies unlock, energy demand has increased and this means oil and gas prices have risen in response.

‘This feeds directly into heating and fuel costs. The increase in rents and house prices also exerts an upward pressure, but one that is felt primarily by those who have recently moved home or who are seeking to.’

Confederation of Guernsey Industry chairman Dave Newman said he hoped the unusually high rate was just a Covid-induced blip.

‘Any rise in inflation is regrettable,’ he said, ‘as it puts pressure on local businesses who have already experienced supply chain delays and increases in raw material costs, along with staffing issues.

‘We are in close contact with members with regard to how this is affecting their businesses, the issues they are experiencing and how best the CGi can represent their concerns.

‘We would hope that this is just a transitory period influenced by the events over the past two years and normal levels will return.’

Guernsey’s RPI calculation assesses prices across 14 groups. All increased over the 12 months, particularly motoring, travel costs and fuel and light.

Guernsey Welfare Service co-ordinator Sue Le Friec said it was clear that inflation was having an effect on islanders.

‘Inflation and a pandemic together do not paint a pretty picture,’ she said.

‘People are struggling.’

She urged those facing financial difficulties to visit or contact the GWS at its drop-in centre at The Caves in Upper Mansell Street, via Facebook Messenger, by emailing info@welfare.gg or by calling 07839 724300.

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