Jersey Unveils New Retail Price Index Figures

by Jason Gorringe, Tax-News.com, London

18 April 2008

Jersey's Government has unveiled the details of the Retail Price Index (RPI) for March 2008.

According to the RPI, during the twelve months to March 2008, the All-Items Retail Prices Index (RPI) for Jersey rose by 3.2% to stand at 134.5 (June 2000 = 100).

The key drivers were food prices and increased housing costs (predominantly due to increases in house prices); both groups contributed 0.9 percentage points to the overall annual increase in the RPI.

The increased cost of fuel, light and motoring was also significant.

The increase in the RPI during the twelve months to December 2007 was 4.5%, implying that Jersey’s annual rate of inflation fell by 1.3 percentage points in the latest quarter.

This decrease in the annual change of the RPI was driven by a reduction in the net change of mortgage interest rates on an annual basis.

RPI(X), the Retail Prices Index excluding the cost of house purchase, increased by 2.9% during the twelve months to March 2008.

The annual rate of increase in RPI(X) was 0.3 percentage points lower than in December 2007, with downward influences from fuel and light, motoring, and household services.

Additionally, the annual rates of increase of RPI Pensioners, RPI Low Income, and RPI(Y) over the twelve months to March 2008 were 2.9%, 2.7% and 2.9%, respectively.

The difference between the rates of increase of the RPI in Jersey and the UK in the latest quarter was primarily due to three groups: housing, motoring and household goods.

Housing was a major contributor to the annual change in the UK, contributing 1.5 percentage points, compared to 0.9 percentage points in Jersey.

However, there were important differences in this group between the two jurisdictions, particularly for council tax (rates), water rates, and DIY costs.

In the UK, council tax increased by 4%, whilst rates in Jersey, overall, fell by almost 2%; water rates rose by around 7% in the UK compared to only a 2% increase in Jersey; whilst DIY costs in the UK increased by 5%, but remained essentially unchanged in Jersey.

The motoring group contributed 0.7 percentage points to the UK RPI, compared to 0.4 in Jersey, due to greater annual rates of increase in petrol prices in the UK, whilst Household goods were a downward influence on the Jersey RPI but were almost unchanged in the UK.

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