Bermuda's rate of inflation hit a high for the year of 3.7 percent in July, according to Government figures released yesterday.

The chief cause of the higher rate of inflation - up 0.2 percent from the 3.5 percent rate recorded in June - was said to be a spike in car repair and maintenance costs because of higher mechanic wages.

Government tracks the cost of goods and services through the consumer price index (CPI), which follows the rate of change in general pricing for a mix of consumer goods divided by commodity type.

For July, the transport and vehicle sector saw the greatest movement with an overall gain of 0.6 percent. That increase was attributed to a steep 7.5 percent increase in what consumers paid out for car repairs and maintenance, primarily because of a hike in labour charges.

Bermuda residents also spent out more when staying at hotels overseas, with an increase in those fees by 0.5 percent.

During July - with the 3.7 percent rate of inflation being the highest in the last ten months - the statistics department reported that the all-items index stood at 127.9 points which was up from the 127.7 points recorded a month earlier.

Consumers also faced slightly higher grocery bills in July as the cost of food edged up 0.2 percent. Items posting the biggest price jumps were local carrots, which were 9.3 percent more expensive, frozen lamb chops were up 7.6 percent, spices cost 5.8 percent more, bacon was 5.6 percent more at the till while both roast beef and strip loin moved up 3.4 percent in cost. Lettuce was also more costly by 2.7 percent.

The price of renting a home went up a 0.2 percent, with the bulk of the increase being seen in rent controlled properties with a 0.2 percent gain.

Meanwhile, the cost of household goods and fuel and power both gained 0.1 percent.

A rise in fuel costs was attributed to a 1.7 percent increase in the cost of propane gas and heating fuel.

The cost of clothing, footwear, health and personal care items were constant month to month, as was the price of tobacco and liquor.

The CPI's education, recreation and reading sector advanced 0.1 percent month over month, which was directly attributed to a 1.4 percent increase in the average cost of pet care.

The Island's rate of inflation for July weighed in significantly higher than in the US, UK and Canada where inflation stood at three percent or lower.

For July, the US and UK recorded an inflation rate of three percent while Canada's inflation level stood at 2.3 percent.

Finance Minister Paula Cox predicted in February, in delivering the annual budget statement, that inflation for 2004 would stand around three percent.

Ms Cox added that while inflation had averaged 3.2 percent during 2003, she expected it to stabilise during the current year.

"With a cautiously optimistic outlook for oil prices in 2004, consensus forecasts for consumer price inflation in G7 countries for 2004 is in the range of 1.5 to 2.6 percent. Barring any sharp increases in university and private education costs in 2004, Government anticipates that Bermuda's inflation rate should moderate in 2004 and track in a range centred around three percent."