Government has called on Bermuda's public to save energy in a bid to reduce the impact of inflation driven by rising oil prices after the inflation rate soared to a 19-year high of 4.8 percent.

In its latest Consumer Price Index (CPI) report, the Department of Statistics revealed yesterday that the annual rate of inflation peaked at 4.8 percent in November 2007 for the first time since May 1988.

The rate also topped last year's previous high of 4.5 percent in May 2007, almost double the 2.6 percent rate for the same period the previous year, and was cause for concern for a number of businesses and companies, who, ultimately end up passing on the cost of inflation to their customers.

Government, meanwhile, has pointed to rising oil prices as the main contributor to the headline rate of inflation for November 2007.

Finance Minister Paula Cox said: "The price of a barrel of crude oil is now at $100 per barrel compared to around $65 per barrel in October 2005," she said. "This represents a price increase in crude oil of nearly 55 percent over a relatively short period of time.

"The impact on Bermuda's CPI both in the fuel and power and transport and vehicles sectors of the index has been significant. Bermuda is significantly dependent on energy imports to power our economy.

"Accordingly, going forward as government, we will be considering how we can better insulate ourselves from the rising cost of oil using alternative energy sources.

"However in the immediate short term we will continue to feel the impact very directly in the inflation level.

"Households could lessen the impact on their household budgets by reducing their levels of energy consumption. Car-pooling and sharing the cost of 'fill-ups' or switching to public transportation could also lessen the financial impact on household budgets."

She added that the other factor lifting the Island's rate of inflation is the sustained weakness of the US dollar.

"The effect has been that imports from the United Kingdom, Japan, Canada and the Euro zone have cost relatively more in 2007 because of the appreciation in the value of these currencies relative to the US dollar," she said.

"In the short term, if the price pressures from oil and the US dollar continue, Ministry of Finance anticipates that the average rate of inflation for 2007 will reach four per cent, having already reached 3.8 percent in the 12 months to November 2007. The Government will consider what other measures, if any, are available to shield the consumer from the energy-related inflation increases."

Phil Barnett, president of the Chamber of Commerce and head of the Island Restaurant Group Ltd., admitted the steady increase in inflation above four percent for the past six out of seven months between May 2007 and November 2007, ranging anywhere between four percent and 4.8 percent, was a big worry for the Island's business community.

"Obviously it is worrying, because basically businesses in many cases are forced to pass on that (the cost of inflation) to everybody, so as much as the whole issue, I know it has affected the restaurant business when you consider how much we rely on electricity for refrigeration and air conditioning and propane use has escalated dramatically," he said.

"To give you an idea of this, at one particular restaurant, we get through seven canisters of gas every two days, and the cost associated with that is quite high, largely due to the rise in inflation. That gives you a sense of what a dramatic impact that can have on our ability to be profitable.

"I think there has to be a very careful emphasis put on that (inflation) and how it is going to affect business."

According to Government's statistics, the transport and vehicles industry was the largest contributor to the 12-month increase in the CPI, with sustained pressure on world oil markets leading to higher gas prices for the premium blend, which was up 13.7 percent year-over-year.

The fuel and power and health and personal care sector also impacted strongly on the annual rate of inflation, with the reported rises 22.2 percent and 6.7 percent respectively.

The inflation rate was not the only factor breaking records, as gas prices set a new record high in November 2007, with the premium and mixed blends climbing 5.8 percent and 5.6 percent respectively, while new motor vehicle prices advanced 0.5 percent and the cost of foreign-travel was up 1.2 percent, resulting in the transport and vehicle sector increasing 1.5 percent overall.

The fuel and power sector moved ahead 1.5 percent for the same period, as a direct result of higher electricity costs being introduced by Belco, while, elsewhere, the fuel adjustment clause rose for the fourth time in five months by 2.4 percent, and the price of a cylinder of propane gas jumped 6.5 percent.

Meanwhile, higher average prices for toiletries, cosmetics and perfumes contributed to a 01. percent increase in the overall health and personal sector.

Food was another big area for change as prices advanced 0.1 percent in November 2007, with fresh milk (5.6 percent), lamb (4.6 percent) and breakfast cereal (0.5 percent) the main items accounting for this rise.

The only sector which experienced a drop in value was the household goods, services and communications industry, which saw its costs decline 0.1 percent, mainly due to a drop in the household goods sub-sector, where the average price of appliances fell by 0.5 percent.