With inflation currently running at more than 5%, an announced 3% rise in next year’s Welsh Assembly settlement for Pembrokeshire County Council is being treated with caution.

A council spokesman said that the fine detail behind the announcement would need to be seen before a full comment can be made, but it was clear there were difficult financial times ahead for Pembrokeshire, as for every other council.

The £159.2m settlement figure is intended to support local services such as education, social services, refuse collection and recycling initiatives and is equivalent to £1,350 for every man, woman and child living in the county.

“On the face of it, an increase of 3% might seem reasonable, but that must be set against the inflation rate announced this week of 5.2%. This will be the second year in which the county council has had an increase well below the inflation rate,” the spokesman said.

“We are still expected to maintain all of our services at the same level and we are regularly being expected to add to these services.”

Perhaps the most savage blow is the increase in energy costs, which have gone up by 100% in recent months. It is estimated that this will cost Pembroke-shire more than £2m extra next year.

“The council has to find the money to heat and light, among other things, 80 schools, and the bill for fuel for refuse collection in our rural county is frightening.

“There is no doubt that hard decisions will have to be made.”

Local Government minister, Dr Brian Gibbons said: “These are challenging economic and financial times for the public sector, businesses and citizens alike. The Assembly is committed to providing the necessary resources for local authorities to ensure they are able to maintain the key services vital to the people of Wales. Every local authority will receive an increase of at least 1.5% next year.”

Dr Gibbons said he had also made £9.2m available to support capital projects in Pembrokeshire. In addition, the council will receive specific grants to support activities including funding for the foundation phase, refuse disposal, recycling and free bus travel.