The island has been warned to brace for the highest rise in the cost of living in over a decade.
In a letter to the Treasury Minister yesterday, economists estimated that “inflation is likely to peak at around 5.9% in 2022”, with the squeeze on islanders’ wallets expected to continue for “one to two years”.
Supply chain pressures following the pandemic had already “pushed up shipping prices and commodity prices…above pre-pandemic levels”, leading to a “knock-on impact on the cost of living”, Fiscal Policy Panel Chair Dame Kate Barker said.
But the Russian invasion in Ukraine is expected to increase costs further.
“Russia currently supplies 40% of Europe’s natural gas consumption and 27% of oil imports. Whilst UK and Jersey direct reliance on Russian energy imports is lower, reductions in supply are translating to higher prices globally. Decisions by western governments to reduce their reliance on Russian imports will likely mean higher energy prices will persist for at least the next year,” she said.
Pictured: Dame Kate Barker, Chair of the Fiscal Policy Panel.
While the island is somewhat buffered by the fact that its electricity is “largely sourced from hydroelectric power and nuclear power, which are less vulnerable to global energy shocks and are subject to long-term pricing agreements”, Dame Kate noted that “the invasion of Ukraine means that oil prices will likely push up the cost of oil and potentially gas heating in Jersey and put upward pressure on electricity prices over 2022, as any long-term contracts expire.”
The warning comes as islanders were already struggling with the costs of food and fuel.
Express revealed last month that food banks had seen a sharp rise in users since the beginning of the pandemic, partially driven by the soaring price of ‘basics’.
The average cost of motor fuel, meanwhile, has rocketed since the beginning of the year. On 29 March, petrol stood at 151.9p per litre, while diesel is 155p.
Pictured: Fuel prices have risen sharply since Russia's invasion of Ukraine.
Jersey Consumer Council recently wrote to the Chief Minister to ask that 9p per litre be removed at the tills, while senior Minister Senator Ian Gorst said he thought that 10p should be taken off before the June election.
However, Treasury Minister Deputy Susie Pinel ruled out any fuel duty cut on Tuesday.
That day, Social Security Minister Deputy Judy Martin announced that the poorest 11,000 islanders would receive an extra £5 per week for the rest of the year to help with the costs of fuel and basic goods, but the Consumer Council said the sum “isn’t even going to touch the sides for most people, and will be quickly swallowed in a single carrier bag of food groceries.”
This morning, Senator Kristina Moore was due to ask States Members to vote in favour of increasing the Community Costs Bonus by 8%, and for that bonus to be extended to anyone who pays income tax at the marginal rate, and all islanders who receive Income Support.
However, she announced this morning that she had spoken to the Social Security Minister and accepted her commitment to create a project team to look into the Community Costs Bonus and withdrew the proposition.
Pictured: The Consumer Council recently wrote an open letter to the Chief Minister asking for urgent action to help islanders deal with rises in the cost of living.
The Consumer Council has also suggested giving households £100 each towards an energy bill of their choice, and postponing the proposed reduction in the de minimis GST level which will make online shopping more expensive.
They also suggested making bus journeys free to town or providing free parking on Saturdays, explaining: “This will save up to £4.80 per return fare into St Helier – the equivalent of the amount of GST spent on almost £100 of shopping, or £2.70 per car driver.”
Deputy Pinel said this week that the Treasury were considering all of these options.
The Jersey Consumer Council has created the following price comparison tools to help islanders compare the costs of different essentials...
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