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Fluctuations in mortgage rates have continued to drive down Jersey’s rate of inflation – but the figure remains high when looking at the global picture.
During the 12 months to this September, the Retail Prices Index (RPI) for Jersey increased by 3%, down from the inflation figure of 5% reported in July.
This 2% gap is significantly larger than the previous quarter's decrease from 5.7% to 5% and suggests a more rapid pace of slowing.
Carl Walker, Chair of the Jersey Consumer Council, said that while 3% "sounds like we're moving in the right direction", further price rises are expected in the coming months, including a 7.5% electricity rise, which could still make life difficult for islanders.
"It is great to see the RPI Index back down to normal levels of stability but it is important to remember we are already in a very unaffordable way of life and it will take a long time to recover," he said.
Pictured: The change of inflation since 2000.
The slower increase in housing costs once again made the most notable contribution to the overall drop, but price increases for most groups were also similar to or less than those seen over the 12 months to June.
Leisure services – which includes entertainment, sport and leisure fees and foreign and UK holidays – made the largest contribution to the annual rate of inflation.
Inflation rose to double digits for the first time in three decades in September 2022. Since that spike, it has fallen steadily, and in April it fell to a rate that was the lowest in two years. And the rate is now around 7% lower than it was this time last year.
The latest Retail Price Index (RPI) report, released this morning by Statistics Jersey, shows costs are still rising – but at a much slower rate than they have been in previous years.
Express took a look at the latest statistics...
Pictured: An infographic showing the big picture of inflation in Jersey.
This covers furniture, soft furnishings, household electrical appliances, kitchen and dining ware, cleaning products and pet care
Food costs remain high and the inflation in this specific group has once again risen from 2.8% from 2.1% in the 12 months to June. The figure therefore gave an upward contribution to the change.
Pictured: a graph showing how the Bank of England's base rate affects Jersey's inflation rate.
Overall prices of housing increased by 0.8%, compared to an increase of 7.3% over the same period of time to June 2024, contributing -1.5 percentage points to the change. The report states this was driven by "changes to mortgage interest rates".
The first drop in mortgage rates for more than four years came in August, when the Bank of England cut its base rate from 5.25% to 5%.
But borrowing costs remain high for many and there have been no further cuts this month.
The report also looks at how vulnerable islanders – such as pensioners and those on low incomes – are faring.
Known as RPI Pensioners, the specific measure for older islanders calculates the rate as if affects pensioner households.
RPI Low Income calculates how it affects those in the lowest fifth of household income.
Over the 12 months to September 2024, RPI Pensioners increased by 3.6%, down from 4.4% in the previous quarter.
Meanwhile, RPI Low Income increased by 3.4%, down from 4% in the previous quarter.
According to the report, the rate of inflation in Jersey over the 12 months to September 2024 was 0.4 percentage points higher than that of the UK, with the Jersey RPI broadly comparable to the UK's CPIH (Consumer Prices Index) which increased by 2.6%.
However, when we compare rates which do not include housing costs – Jersey's RPI(X) of 3.5% and UK CPI of 1.7% – the island's figure is around double that of the UK.
While comparisons are difficult to make with other countries, Trading Economic lists the inflation rates internationally using similar calculations.
Their figures show that Jersey's rate ranks rather highly, with many countries like Canada, Germany, Spain, France, and others having rates that have now fallen under 2%.
Pictured: inflation rates internationally.
Reacting to the figures, Mr Walker said: "While 3% sounds like we're moving in the right direction, it still means prices are going up, just perhaps not by as much as they were this time last year. And while food prices may now only be climbing by 2.8%, grocery shopping is still extremely expensive for Islanders, and Islanders will continue to struggle and find it hard doing their daily shop".
"We also have to bear in mind that we have increases in electricity coming in the new year plus warnings that other utilities may have to rise as well. We are already in a very unaffordable way of life and it will take a long time to recover."
Pictured: Carl Walker.
On the housing costs, he added: "There is an encouraging sign in terms of interest rates because predictions are that Bank of England rates will continue dropping until they hit around 3%. That will continue to slow things down, but we're in this for the long haul."
The Jersey Financial Services Commission has previously written to local mortgage providers to ensure that pricing and account closure policies provide a "transparent and fair experience for customers", and the Consumer Council also asked providers to justify why islanders are routinely having to pay significantly more for goods and services than those living in the UK.
Mr Walker said: "The Consumer Council earlier shone a spotlight on local interest rate providers who continue to offer higher rates than those available in the UK despite linking their rates to UK interest rates, and this creates the anomaly which we potentially are seeing in today's latest RPI figure.
"The Consumer Council will continue to put pressure on lenders and service providers who seemingly unjustifiably charge more for a similar service in Jersey in the hope that eventually these industries take note and treat islanders more fairly."
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