Responding to the latest increase in Guernsey’s inflation to 7%, IoD Guernsey’s lead on economics, Richard Hemans, said: ‘It is creating significant challenges for the island, business and consumers alike that we are facing the highest rates of inflation since the early 1990s. The rate of inflation is increasing and is broad-based across all categories of expenditure. The biggest impacts are inevitably being felt in food, energy and housing, all essential categories that are leaving consumers worse off financially and with less spend available for discretionary items. Businesses are therefore facing a profit squeeze, not only from lower demand but from higher input costs, particularly as employees seek higher wage increases in an already white-hot labour market.
‘Whilst the States of Guernsey will find some consolation in that the island’s rate of inflation is much lower than the UK and in line with Jersey, thereby protecting our competitive position to some extent, inflation is likely to put pressure on the public finances, as well as forcing the States to consider more carefully the impact it is having on local inflation and to offer additional support as many islanders struggle to cope with the cost of living crisis.’