THE American dollar's record-breaking slump on the world money markets in 2003 is starting to hit Bermudians in the pocket.

Anything imported from Europe or the Far East is costing more to bring in because of the greenback's significant slide against currencies like the euro and the Japanese yen.

And that cost increase is inevitably being passed on to the consumer.

The trend is particularly noticeable in car sales, as most automobiles on the island are imported from either European or Japan.

The US dollar, which is tied to the Bermuda dollar, finished 2003 at a record low against the euro. The euro gained around 17 per cent against the dollar over the year.

The Japanese yen also gained 11 per cent in value against the dollar this year and on New Year's Eve UK sterling hit its highest level against the dollar since September, 1992.

And goods from Canada are also getting more expensive, as the Canadian dollar has gained nearly 20 per cent on the US currency in 2003.

Experts say there is little sign of any imminent strengthening in the dollar's value, as both the US Federal Reserve and the European Central Bank appear unconcerned by the weakening of the dollar.

The weak dollar has given a boost to the US economy because it has made its exports more competitively priced.

Richard Davidge, owner of Pembroke-based Renault dealers Eurocar, said the weak dollar was applying an upward pressure on his prices.And when the worsening exchange rate put up a car's dollar value, it could drastically increase the duty payable on the vehicle.

"If the cars value exceeds $12,000, then the duty payable on it goes up from 75 per cent to 150 per cent," Mr. Davidge said.

Even if there was no actual price increase from Renault, the customer could end up having to pay a significant amount more, because the exchange rate had pushed the car value to a higher duty bracket, he added.

Mr. Davidge added: "We have had two price increases this year. I think it's the same for other dealers, including those buying from Japan, because the dollar is also weaker against the yen."

He suggested that the Ministry of Finance could help dealers and customers by raising the duty threshold to $15,000 ? at least while the dollar continued to be so weak.

Jeff Stirling, general manager of Pembroke-based Peugeot dealers Continental Motors, agreed the dollar's demise had applied upward pressure on prices of his company's French cars.

"We've had one price increase this year, but we're doing our best to try and absorb the effects of the exchange rate," Mr. Stirling said.

"Peugeot does not change its prices very often and they certainly won't change again until the middle of 2004."

Food and drink imported from Europe is also getting more expensive.

Tredick Gorham, president of the Front Street supermarket Supermart, said the effects of the weakening dollar had been negligible so far in his business.

"There is a bit of a time-lag in effect, based on our inventory and when we re-stock," Mr. Gorham said.

"Most of the stuff we bring in comes from the US, so it's not affected. But with English products and European wines we are beginning to see a change. That does not necessarily mean the rise in cost will be passed on to the customer.

"So far we have seen only minor changes, but the anticipation is that if the dollar continues to slide, we will have to make changes.

"But it keeps everybody sharp. For example, if the price of French wine goes up so much that people stop buying it, then there will be changes."

Bermuda exporters could benefit from the dollar's slump, but very few goods from the island are sold overseas.

Gosling's is one of our few exporters, its Black Seal rum proving increasingly popular around the world year by year.

"We send away about 50,000 cases of Black Seal a year, but 87 per cent of our sales are to the US ? the world's biggest rum market ? and the dollar's situation makes no difference there," said Malcolm Gosling.

However, the weak dollar meant that Gosling's could offer more attractive prices for its products to European buyers. And the company was currently negotiating a deal with a UK distributor that would significantly increase sales to Britain.

And there was increasing interest in Black Seal coming from other parts of Europe too, added Mr. Gosling.

Gosling's is also an importer of alcoholic beverages.

Charles Gosling said: "We are getting price increases on wines, champagne and cognac from Europe. When the cost of living figures come out each month, it is clear that the price of wine is going up.

"The strength of the euro is a factor, but what makes it worse is that we are seeing price rises on top of that. We are hoping they are not going to price themselves out of the market."