‘Inflation decline notably slower than Jersey’s’ - IoD spokesman
Concerns about the island’s competitiveness have been raised if local inflation continues to stay ‘stubbornly high’, a spokesman for the Institute of Directors has warned.
Richard Hemans, the IoD’s economics lead, said that the island’s new headline RPI figure of 5.3%, although falling, remained high in comparison with pre-pandemic levels.
It is also ahead of Jersey, which is now 5%, dropping from 5.7% in March, and the UK, which has fallen from 14% to just 2%.
‘While Guernsey did not experience the same elevated rates of inflation as the UK and Jersey during the pandemic, the pace of the decline is notably slower,’ he said.
Mr Hemans said that inflation was expected to continue to fall gradually. It could be down one percentage point by Q1 next year, he said.
‘This underlines the slow pace of decline and that inflation will take many years to return to pre-pandemic levels, even without any unknowable further shocks to supply or demand.
‘Inflation in Guernsey is being driven by the high cost of housing and labour. The island is an attractive place to live and work, and the supply of housing and labour remains very tight.
'The States’ focus on providing more housing is exactly right because it will have both long-term economic and social benefits.
‘Guernsey’s rate of inflation is stubbornly high, which could undermine our competitiveness if not addressed.
‘Falling interest rates and smaller increases in electricity should help to lower inflation. More attention also needs to be given to the supply and quality of labour, which will also help to reduce inflation.’
This was the first quarter since the pandemic where quarterly price increases were coming in at pre-pandemic levels, he added.
