THE drop in the Island’s retail price index, although welcome, is more a reflection of difficult market conditions, says the Jersey Chamber of Commerce.

Responding to the latest headline RPI of 4.5%, which was announced on Wednesday, Chamber retail spokesman Ray Shead said that members were ‘obviously pleased’ with the 0.8% fall during the last quarter, which is also lower than the latest Guernsey rate of 4.6%.

‘It will makes things a bit cheaper, particularly as rent agreements are tied in to the cost of living,’ he said.

‘But it also reflects market conditions.

If you look at the quarterly figures for food and clothing, there has been no increase at all, which reflects the difficult – and competitive – market conditions.

It is more a sign of reduced demand than anything else.’ The chairman of the Jersey Institute of Directors, Andrew Lewis, said he believed the drop in RPI was a positive development.

‘We hope there will be more of that to come.

However, with the new taxes on the horizon we absolutely must not become complacent.

‘The Competition Law and greater consumer awareness will help ensure that prices reflect the reality of market conditions.

Once this is the case we can more readily accept a Goods and Services Tax.

‘In the long run, the cost of living in Jersey will stay affordable, even with tax increases, if prices are set honestly and shoppers are discerning,’ said Mr Lewis.