FOCUS: Inflation hits 4.6% – but why is it higher than UK and Jersey?

Guernsey’s rate of inflation has soared above both Jersey’s and the UK’s over the past year.

Housing costs have pushed the rate of inflation – the rate at which prices rise – to 4.6% at the end of September in Guernsey.

This compares to 3% in Jersey, 3.5% in the UK, and 3.1% in France.

Excluding mortgage interest payments only drops Guernsey’s current rate of inflation to 4.5% – still above our neighbour’s.

The current rates

Comparisons are often made between Guernsey and Jersey and Guernsey and the UK.

Express has also looked at the rate of inflation in France.

In each comparison the cost of living in Guernsey is higher.

Each area will calculate inflation slightly differently – but the headline remains the same: the cost of living in Guernsey is rising quicker than our neighbours.

These HCIs were designed to “aid understanding of the differences in rates of price inflation being experienced by different types of household in Guernsey”.

Those different types of household cover “low-income vs high-income” and households with varying numbers of children, or no children, older people, younger people, owner-occupied households, private rentals, social rentals and partial ownership households.

The basket of goods

The basket of goods used to monitor prices in Guernsey varies, with both ‘staple’ goods and services and ‘additional’ goods and services included.

Rent and mortgages and other housing expenses are used to calculate the Retail Prices Index (RPI), which is the figure published – currently 4.6%.

The RPIX is a secondary index that tracks inflation while excluding mortgage interest payments. This can show any underlying price pressures.

The Household Cost Indices (HCIs) are published in Guernsey as additional information monitoring how price changes impact different households. 

Current pressures

Guernsey’s current rate of inflation has increased to 4.6% over the year up to the end of September 2026.

That is up 1.3 percentage points compared to September 2025, and 0.3 points higher than it was over the year ending in June 2026.

A breakdown of the data reveals that excluding mortgage interest payments from the headline figure only drops the rate of inflation down to 4.5% – which is 1.2 percentage points higher than a year ago and 0.2 points higher than in June.

Comparing Guernsey to Jersey here proves that the cost of running a home in Guernsey is higher, with Jersey’s rate of inflation excluding mortgage interest and indirect taxes rising by 3.5% over the past year.

Jersey’s inflation data reveals that housing costs have increased 0.2% annually adding just 0.05 percentage points to the overall rate.

In Guernsey, overall housing costs contributed 1.1 percentage points to the current rate of inflation. The cost of ‘fuel and light’ contributed a further 0.9 percentage points to housing costs, with kerosene and electricity prices the largest individual contributors.

Although a ‘basket of goods’ is used to measure inflation – namely food – the ‘all-items RPI’ reveals that the cost of ‘fuel and light’ went up by 16.6% over the past year, while tobacco costs increased by 10.4%, and motoring costs increased by 6.8%.

HCIs

Looking at Guernsey’s ‘housing costs indices’ which break the data down by households in different circumstances, shows that the rate of inflation rose by between 3.9% and 5.3% over the year ending in September 2026.

Households containing one or more retired people were the HCI with the highest overall increase, at 5.3%.

Staple goods and services increased by 6.7% for this group, contributing 3.8 percentage points to the overall increase in this index.

Households in privately rented homes saw the lowest overall increase in Guernsey, at 3.9%, with staple goods and services increasing by 4.4%.

The households that have seen above average increases from the rising costs of staple goods and services also included low-income households, households with one or more people with a disability, and owner-occupied households without a mortgage.

Why is our rate of inflation higher?

Comparing the rate of inflation between jurisdictions might not be simple because of the way different places calculate the cost of living.

Directly comparing Guernsey to Jersey suggests the cost of living is higher here than there.

Housing costs have pushed the RPI in Guernsey up higher and faster than in Jersey, but the two islands measure the impact of mortgage interest payments differently.

Guernsey’s calculation reflects the average interest paid by all current mortgage holders, meaning rate changes pass through slowly.

Jersey’s calculation is based on rates available for new borrowers, allowing its RPI to respond much faster to fluctuating interest rates. 

The Institute of Directors has previously published analysis on the different rates of inflation, commenting on the varying employment markets, competition in key sectors, and differing fiscal pressures in Guernsey and Jersey.

GST

Guernsey’s rate of inflation currently sits above Jersey, the UK, and France, all of which have a consumption tax.

With the recent States decision, a goods and services tax is due to be introduced in Guernsey in 2029.

Ahead of that debate, Policy and Resources (P&R) said it had modelled the impact of GST on inflation at a headline level.

It estimated a 3% GST would increase inflation by around 1.9%, compared to an earlier estimate of 3.2% with GST at 5%.