Mortgage interest rates and the cost of housing have been given as reasons why Guernsey’s headline rate of inflation remains higher than Jersey’s and the UK’s.
The latest data shows that Guernsey’s all items RPI is 4.2%.
Jersey’s is 2.3% and the UK’s is 2.6%.
All are lower than they were a month or a year ago, but Guernsey’s remains higher.
A spokesperson for the States of Guernsey sought to explain for Express why that is.
RPI and RPIX
While RPI includes ‘all items’ the RPIX figure excludes mortgage interest payments.
Looking at RPIX, Guernsey’s rate of inflation was 3.8% at the end of March, while Jersey’s was 3.4%.
The two island’s calculate the impact of mortgage interest payments differently which accounts for the change in figures compared to each other and compared to each island’s RPI figure.
In Guernsey, the calculation is based on the average amount of interest paid by people who currently hold a mortgage.
In Jersey, the calculation is based on the interest rates available for new borrowers – meaning that Jersey’s RPI is able to respond to fluctuating interest rates much more quickly than Guernsey’s can.
Looking back to a couple of years’ ago, Jersey’s RPI peaked much higher than Guernsey’s – at over 12% in 2023, compared to 8.5% in 2022, which was the highest its been since 1991.
However, the different way that Jersey calculates mortgage interest payments meant their RPI also fell more quickly and steeply than Guernsey’s has, as interest rates have contracted since their post-covid era peak.