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DIGEST: Is inflation pressure finally starting to ease?

DIGEST: Is inflation pressure finally starting to ease?

Friday 21 July 2023

DIGEST: Is inflation pressure finally starting to ease?

Friday 21 July 2023


Islanders are continuing to be battered by rising costs – but the rate at which they are rising has dropped for the first time since 2021, figures released today have shown.

There was good news for islanders as inflation slowed in the areas of motoring, fuel and light, but housing continues to be a key pinch point (up 27.4%), driven by the cost of mortgage interest payments.

Food also remains the second largest contributor, with a 15% increase in the 12 months from June 2022.

The figures were released this morning in Statistics Jersey's latest Retail Price Index (RPI) report, which showed that during the 12 months to June 2023 the overall RPI for Jersey was 10.9%.

This was slight drop (1.8%) compared to the last quarter, when it remained at the historic high of 12.7%, which at the time was one of the largest rises since the 1980s.

It comes after official statistics released earlier this month showed that average household income in March stood at £930 per week after housing costs, a 4% increase since 2019/20. It led to warnings from the Consumer Council that inflation outstripping wage rises has left some islanders, including pensioners, feeling they have no choice but to leave. Many have also suggested that cost-of-living has been a key driver of the 'Bean drain' – an apparent exodus of Jersey-born and long-term residents in recent years.

The latest statistics at a glance...

Going up, up, up

Housing ↑ 27.4%

This category includes Parish rates, rents, and mortgage interest payments – the latter were affected by increases in the Bank of England Bank Rate over the last 12 months and contributed most to the rise.

Food ↑ 15% 

Fares & other travel  12.1% 

Household goods ↑ 9.9% 

This category includes typical household items which are not perishable, such as cleaning products.

Going down...

Motoring ↓ 0.6%

A key driver for the decrease in the annual rate of inflation was the motoring group, particularly the decrease in the petrol and oil section over the last 12 months.

Personal goods and services ↓ 0.4%

This group includes GP fees, which saw prices decrease to June 2023, largely as a consequence of a Government of Jersey scheme that applied from 1 June 2023.

Fuel and light ↓ 0.3%

Some prices in this group increased to June 2023, "whereas others, such as the oil and other fuels section, decreased", according to the report.

Impact on vulnerable islanders

Back in April, the statistics also showed that those in the lowest fifth of household income in the island took their biggest hit in 16 years, with rises in the cost-of-living in this category standing at 8.6% year-on-year.

In the latest RPI report, those on lower incomes faced a smaller rise than in March 2023, this time at 6.4%.

Pensioners, meanwhile, saw a rise of 6.8%.

How do we fare compared to the UK?

According to the report, the rate of inflation in Jersey over the 12 months to June 2023, was 3.6% higher than in the UK.

"Costs associated with owning and occupying one's own home are reflected through a rental equivalence method in the [UK inflation index], hence its rate of increase is less directly affected by changes in the Bank of England Bank Rate, than the Jersey RPI," the report noted.

Find further analysis in tomorrow's JEP...

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