The Government of Bermuda has downplayed concerns about inflation reaching 3.8 percent in September, stating that the worries about the economy are not justified and present a ?distorted picture of the situation? and there was ?no cause for alarm?.

And it said, through a release, that visitors would not stop coming to Bermuda because prices in stores or hotel prices ?may be slightly higher than they are in other destinations?.

Hitting back at criticism from opposition leader Grant Gibbons and an editorial in about worryingly high levels of inflation, a release was issued by the Department of Communications and Information, the official Government press office, headed ?Bermuda Inflation in Perspective?.

The release said that the revelation that inflation in September was 3.8 percent, its highest level in 12 years ?has led some observers to suggest that inflation is soaring and is likely to do considerable damage to many of our citizens and the Bermudian economy as a whole?.

In August inflation reached 3.4 percent, and has been above 3 percent since April this year ? well above levels in the US, the UK, Europe and Canada.

But the Government release added: ?Unfortunately, that interpretation presents a distorted picture of the actual situation and creates worries that are not justified. Of course, a 3.8 per cent inflation rate ? if it were to persist ? would be troublesome. But a careful assessment of the factors behind the rise shows that ? while the increase should be noted ? there is no cause for alarm.?

Dr. Gibbons said this week that rising inflation was proof positive that Bermuda?s economy is not as strong as the Government claimed.

And he said that rising inflation was making Bermuda less competitive in tourism and international business.

?I think it gives us the conclusion that the economy is not as stable as the Minister (of Finance) has said in the last few weeks,? said Dr. Gibbons, adding that this, combined with poor balance of payment figures announced last week due to a ?dismal? tourism sector and a slowing growth in international business showed a less than rosy economy. editorial on Wednesday said that Dr. Gibbons was right to raise concerns about the rate of inflation.

?It is a sign that while the Bermuda economy remains relatively robust, it is showing signs of weakness at a dangerous time,? and added that it was worrying that Bermuda?s prices were rising more quickly than those of its major trading partners.

Government hit back at these assertions, stating: ?With respect to the potential impact of short-run inflation on Bermuda?s tourism and international businesses, it is highly unlikely that any serious damage will be done.

?A rise in consumer prices over a few months will not make Bermuda less competitive in either arena. Tourists would not stop coming to Bermuda because retail prices or hotel rates may be slightly higher than they are in a few other destinations.

?Rather they are attracted mainly by the strong recreational and cultural advantages for which Bermuda has been known for many years.?

It went on to say that historically international businesses had come to Bermuda principally because of its hospitable business environment.

?Attractions include firm but reasonable regulations, high quality professionals and business services and air links to the major business centres in other countries. While registrations of foreign companies may have slowed somewhat this year, they are still coming in,? added the release.

The release pointed out that the 3.8 percent rise was driven primarily by rises in four categories of goods and services, education, recreation, and reading (7.6 percent), health and personal care (7.3 percent), transport and vehicles (5.8 percent) and fuel and power (3.6 percent).

?While the month-to-month fluctuations in the prices of specific categories of goods and services do provide a sense of drama, a more comprehensive assessment of the trend of inflation requires a little more analysis,? added the release, sent out by the head of the information service, Beverley Morfitt.

The release said that the pattern of annual changes in the consumer price index, which is used as the measure of inflation, reflected a change of 3.0 percent.

?In the mid-year assessment of economic conditions, the outlook for inflation was based on an analysis of price trends using 12 months of price data. This data suggested that inflation would average out in the 3 per cent range for 2003,? the release said.

The average rate of inflation from January to September this year, based on data provided by Government, shows the average rate of inflation has been running at 3.2 percent.

In January this year, inflation rose in to the 3 percent bracket, dipped back down to 2.9 and 2.8 percent in February and March respectively and then started rising again, hitting a peak of 3.4 percent in August and then 3.8 percent in September.