Bermuda?s annual rate of inflation in January passed the four percent mark for the first time since 1991 as rising oil prices drove up the costs of electricity and gasoline, the Department of Statistics said yesterday.

The rise in oil prices helped to drive the annual rate of inflation to 4.1 percent from 3.8 percent in December and marked the first increase in the rate of inflation since November last year.

The biggest price increases for the month were recorded in the fuel and power sector, which rose 1.5 percent from December and 7.1 percent year over year and the transport and vehicles sector, which was up one percent since December and 6.1 percent compared to January, 2003.

There is also little likelihood of fuel and electricity prices falling in the near term as world oil prices again surged last week.

Aside from fuel prices, rents also increased by 0.3 percent between December and January and are up 2.6 percent year over year.

Most other sectors of the Consumer Price Index were relatively flat.

Finance Minister Paula Cox said in her Budget Statement last month that if the US dollar remained weak and oil prices remained high, ?the worst case scenario? was that inflation would reach four percent in 2005.

Chamber of Commerce president Charles Gosling said businesses were becoming increasingly concerned about price increases and the risk that the economy was overheating.

?If anything, there is a concern with the heat of the economy and not only Government but businesses need to try to keep a handle on inflation,? he said.

?We have a lot of external pressures, the price of oil being one along with the weakness of the US dollar, but we have constantly been going on about Bermuda pricing itself out of the market and if we can?t get a handle on inflation, we will do that very quickly.?

Mr. Gosling noted that high oil prices not only affected electricity bills and motorists but would be passed in price increases to other businesses.

?We have seen it with the price of goods coming in,? he said. ?Freight costs have increased way above the inflation rate over the last 18 months. There is also great pressure over the ability just to ship things due to the growth in China. There was a great hold-up in Europe last summer just to get containers because demand in China was sending al the containers to the Asia-Pacific region.?

Inflation is also likely to increase pressure for wage increases, he said, and this might drive up costs further.

The Department of Statistics said fuel and power increased as the fuel adjustment clause stood at 5.3 cents per kilowatt hours, an 8.2 percent increase compared to December. That increased overall electricity costs by 1.5 percent.

In addition, Belco received permission in January to increase its basic rate by 1.5 percent. This was the first time in nine years that it had been increased.

The increase in oil prices also hit motorists as consumers paid 4.4 percent more for premium gas month over month and 4.2 percent for mixed gas. The cost of car and bike repairs rose 0.2 percent and 0.5 percent respectively while overseas travel costs surged 1.2 percent.

The education, recreation and reading sector also advanced 0.1 percent month over month as the average price of boat fuel increased.

The rent increases were felt most deeply in the non-rent-controlled segment, with prices rising 0.5 percent month over month. Rent-controlled properties rose by 0.3 percent. A 1.2 percent rise in the cost of childcare drove the household goods and services sector up 0.2 percent since December and 1.4 percent year over year.

Food, tobacco and liquor were unchanged. The health and personal care sector, which has seen price increases of more than ten percent year over year, edged up 0.1 percent for the month as personal care items like cosmetics, toiletries, facials and massages rose.

Inflation also continues to surge ahead of the Island?s main trading partners. Bermuda?s inflation rate was 4.1 percent in January compared to an average of 3.6 percent in 2004, US inflation was three percent in January and 2.7 percent in 2004, Canada?s was two percent in January and 1.9 percent last year and the UK?s was 3.2 percent and three percent in 2004.