future because of the rise of the yen against the dollar.

Local retailers said yesterday the cost of goods -- and the duty paid on them -- will rise and the increases will almost certainly be passed on to consumers.

Cars buyers will be among the hardest hit, according to Mr. John Bento, general manager at Holmes Williams & Purvey Ltd., which imports Suzuki and Mitsubishi cars.

"When the budget came out, the drop in the yen was never considered,'' he said.

A strong yen -- the US dollar was yesterday at about 82 yen -- means Japanese cars are going to cost more and will fetch more duty. The yen has gained enough strength that the Bermuda family car buyer is now facing Government's second level of duty, Mr. Bento said.

Car buyers pay 75 percent on the first $12,000, and an additional 150 percent on any amount over $12,000.

Mr. Bento estimated many families buy cars that cost about $12,000.

"Margins are already stretched to the limit,'' he said. "The end result is inflation. Some companies may have to re-evaluate their positions as return on investment declines.'' Mr. Bento said that because the dollar's value has dropped from an earlier level of 130 yen to just over 80 the cost of a car will rise by thousands of dollars.

Cycles are also among items Bermuda consumers are likely to pay more for as the Yen gains in strength, said Mr. Geoffrey Gibbons, general manager of Oleander Cycles Ltd., which sells Suzuki cycles.

A stronger Yen has a "major impact'' on prices in Bermuda, he said. "At the present time we are withholding any purchases from that part of the world.

With a weak dollar the end product is just too expensive. Everybody in the cycle business will be affected as well as many other products like stereos and cameras and cars. Obviously we have had to explore other markets to see what is available but many markets make products which include Japanese parts which also helps push the price up. But many factories are being helpful in their pricing and payment schedules.

"We have had a minor increase in retail pricing and renting cost.'' But the cost of licensing and insurance on the Island has also gone up and manufacturers have increased the number of options on cycles at the request of the consumer, pushing costs up as well, he explained.

Mr. Edward Rego, president and managing director of Stuart's on Reid Street, said until a few days ago all his Japanese-based major suppliers had held off putting prices up because of the rising yen.

"One camera maker this week notified the store it will raise prices,'' he said. "We will attempt to work with manufacturers and attempt to absorb as much as we can. Manufacturers are looking at this very closely. They do not want to lose market share,'' he added.

Stuart's carries several lines of products from cameras to televisions, and various other electronic products originating from Japan.

"It will affect everybody,'' concluded Mr. Rego.

Mr. Greg Hopkins, co-owner of the Winners Edge bicycle shop said although bike and bike part prices took an expected jump at the start of the year, he has not been the victim of further hikes because of guaranteed pricing linked to preseason orders.

The 1995 increase was absorbed and prices were kept at 1994 levels.

"We bit the bullet this year,'' said Mr. Hopkins, who with Mr. Paul Medeiros opened the business three years ago.

Though many of their bikes are bought outside Japan, just about every bike has Japanese-built Shimano parts, he noted. Fears that Japanese goods would start costing more started in mid-1994 when the dollar plunged through the 100 yen barrier, but hikes were partially averted as Japanese manufacturers cut margins. Many now speculate there is little that can be done to defend the US currency and prevent further decline.