Inflation drops slightly, but prices up by 2.5% in quarter
PRICES have continued to rise sharply over the last few months, with a 2.5% quarterly rise in the retail price index bringing the annual rate to 8.3%.
This figure, published by the States yesterday, represents a slight drop from December’s figure of 8.5%, which had been predicted.
RPIX, which excludes mortgage interest payments, stood at 8.0%.
Financial forecasts predict a further drop to below 6% by the end of this year, so the rate of inflation is likely to have peaked.
However, significant price rises will continue for several months and among those most affected are people in ‘affordable housing’.
A recent addition to the quarterly inflation bulletin is the household cost index, which shows that social renters and partial owner households faced an 8.6% annual increase in their overall costs – the largest of any of the 13 housing categories analysed.
Furthermore, a large chunk of this increase (6.5%) was down to ‘staple goods and services’ such as food shopping, housing and utility bills, as opposed to ‘additional goods and services’ where consumers ‘exercise some degree of choice’ like alcohol, restaurant/cafe visits and exercise classes.
One single parent with two children, who chose not to be named when approached by the Guernsey Press yesterday, said they had seen their partial ownership housing costs rise by 17% in the space of a year.
‘I’m only on a 40% mortgage, as I couldn’t afford to go higher,’ they said.
They are paying off a mortgage taken out against their share of the home, while paying rent to the owners of the other 60% – the Guernsey Housing Association.
‘In the last year my mortgage went from £600 to £770 and my GHA rent went up from £550 to £575. So in total I pay £195 a month more than this time last year.’
Their salary has not kept up with these increases, nor with the overall rate of inflation.
They are currently seeking higher-paid work but are struggling to find a job with hours flexible enough to accommodate their childcare responsibilities.
‘It is tough. I’ve made some cuts in my budget but I can’t cut the children’s activities as it wouldn’t be fair to them. A lot of my neighbours are in the same boat,’ they said.
