The increasing cost of servicing a mortgage has resulted from the combined effects of rising prices and interest rates, with the Bank of England having set another increase during the quarter.  The next highest contributors were food and alcohol at 0.5%. The cost of wines, spirits and fortified wines purchased from retailers increased this quarter. With the exception of cider, the price of alcohol has risen over the past 12 months following duty increases.  It is expected that the next move from the Bank of England will be downwards from the current 5.75% base rate.

Deputy Trott welcomed a slight fall to 2.9% in the RPIX figure, which excludes housing from the calculation and is preferred in some jurisdictions. ‘A downward move is the direction we want to see,’ he said. Low inflation is a key element of sustaining the economic and taxation strategy the States has adopted from 2008, allowing positive growth in real terms. The UK’s RPI figure is 1% below Guernsey’s at 3.9%, a fall from 4.4% in June. Jersey’s figure is due to be released on Wednesday. The index is the measure of inflation and reflects changes in prices for goods and services.  Clothing and footwear was the only group to have a downward effect on the index over the past 12 months, contributing to -0.3%.