The Falkland Islands' retail price index RPI increased by 2.9% in the 12-month period ending on December 2018, members of the Legislative Assembly were informed. The increase is broadly in line with previous quarters’ year-on-year increases.
The biggest contributor to the increase was fuel and power (excluding vehicle fuel) and food and alcoholic beverages.
Lawmaker MLA Leona Roberts echoed concerns expressed at previous meetings that communication costs were still showing a considerable deflationary effect on the RPI by virtue of increased megabyte allowances introduced this year.
MLA Roberts pointed out that while she understood why the RPI has to be calculated in the way that it is, she found it “troubling” that it could provide an inaccurate inflation figure.
As such, the exaggerated deflationary effect of communication costs should be taken into account when calculating cost of living increases in the upcoming budget round, she argued.
In related news the Standing Finance Committee this week rejected a recommendation calling for a 1p increase in the price of an electricity unit.
A further increase, members argued, would be excessive given that a 2p increase was already introduced in April last year.
A paper submitted to the committee recommended the increase due to a 5p increase in the price of diesel since the budget was set and “a period of falling demand while production costs are increasing due primarily to the age and condition of plant and equipment.”
Speaking at the meeting, MLA Roger Edwards expressed concern that the cost of depreciating capital investments in this area should be included in the formula for calculating the unit price.
MLA Edwards added that this could lead to further increases once the interim generators come on line, or indeed when a new power station is built.
It was noted that it has already been agreed to work on a new model to calculate how the costs of the interim power station can or is factored into the unit price.
It was further acknowledged that the decision will result in a budget shortfall at the end of the financial year. (Penguin News).