Finance Minister Eugene Cox this week said he was not alarmed by the Island's inflation rate standing at 3.4 percent in October, on the back of September's rate climbing to 3.8 percent.

Government had said, after the high 3.8 percent September inflation rate was revealed, that were it to continue at the level, it would be cause for concern but the Ministry greeted the dip to 3.4 percent in October, as a good sign.

Mr. Cox said: "It is already starting to go down, isn't it? 3.4 (percent) is not too far away from three (Government's earlier prediction for the year) and the other factor is that when you add it year over year, this is where you get the true value."

Both Mr. Cox and Financial Secretary Donald Scott said they were looking at how things would pan out for the year and were not concerned that for seven months running, the rate of inflation had been higher than where they pegged it at three percent for 2003.

The Bermuda Consumer Price Index figures released monthly by Government show that the rate of inflation was at three percent in January, but in February and March it dipped slightly below that mark at 2.9 percent and 2. 8 percent respectively. Since then inflation has hovered above three percent when in April it climbed to 3.3 percent, 3.3 percent in May, 3.2 percent in June, 3.1 percent in July, 3.4 percent in August and spiked to 3.8 percent in September.

Mr. Scott said: "We think this is in the range of price stability that Government has targeted for some time, which is 2.5 to three percent. It is not bothersome, at this point.

"Clearly if it continued at 3.8 percent month after month after month, there would be reason for some concern. But one of the things that Government has attempted to point out is that it is more instructive and helpful to look at the underlying trend rather than the monthly fluctuations which are impacted by seasonal factors."

Mr. Scott pointed to the effect of higher school fees, a seasonal change, on September's rate: "As in September when you have new tuition (rates) for private education, and the index also takes into account the fees for overseas schools and universities. September was heavily impacted by that, and that would be why in October you saw (inflation) come down to 3.4 percent. But when you average that all in, we think it will end up somewhere around 3.2 percent for all of 2003. And again, that is not something that is too bothersome."

Mr. Scott added: "What we do is look at the underlying trend. For instance, when the Minister reported to the House in early November on his view of the economy as it had developed over the first six months (of the year) and looking forward and how things might pan out in the short to medium term on inflation. We do not look at the month to month fluctuations, what we do do is look at trends and what we found is that for the year 2003, what we anticipate is that will end up somewhere in the three percent range - somewhere between 3.1 and 3.3 (percent) overall."