Fuel and power costs increased by a whopping 32 percent over the 12 months from February 2007 — but the rate of inflation fell to its lowest rate since last April.

The Consumer Price Index (CPI), released by the Department of Statistics yesterday, reported an annual inflation rate for February of 3.4 percent — down from 3.9 percent in January.

The main driving force behind price rises was the rising cost of oil. In particular, electricity consumers have been hit hard by higher fuel adjustment clause rates on their Belco bills.

CPI statistics showed that the fuel adjustment charge alone rose 2.1 percent between January and February of this year, as the fuel and power sector as a whole accelerated 2.8 percent.

Food prices were up 3.4 percent, year on year, while rent went up two percent.

The price of milk, which rose 7.2 percent between January and February, was a major driver in rising food prices, as flour also rose 4.9 percent for the month and green peppers by 3.9 percent.

Although tobacco and liquor costs were up 3.7 percent from a year earlier, they actually fell in the month of February, reflecting a 0.1-percent decrease in the price of beer and a 0.8-percent fall in wine costs.

Bermuda's inflation rate compares favourably with that of either the US (4.0 percent) or the UK (4.1 percent), but Canada boasts annual inflation of just 1.8 percent.

The CPI is based on a "basket" of goods and services that a typical household on the Island would buy. It calculates that goods and services that cost $100 in April 2006 cost $105.60 in February this year.