the Island's economy.

The annual inflation rate in June was 1.9 percent, down from the 2.1 percent in the previous month according to Bermuda's Statistics Department. Consumer prices on average increased 0.3 percent in June.

Over the past 12 months the annual rate of inflation has hovered between 1.8 percent and 2.2 percent. In the first half of the year inflation ranged between a low of 1.8 percent in April and a high of 2.1 percent in March and May.

In comparison the US rate of inflation ranged from a low of 1.4 percent in February to a high of 1.7 percent in June. Canada's annual inflation rate was 1.1 percent in June.

A spokesperson for the Statistics Department said Bermuda's inflation rate historically was usually a little above that of the US, as it has been this year.

The 0.2 of a percentage point difference was within an acceptable range, she said.

Since Bermuda buys most of its goods from the US, its inflation rate was tied to that country's inflation rate. The slightly higher rate experienced in Bermuda was due to general differences in the two economies and not to any specific reason.

"We would be concerned if Bermuda's rate was six percent and the US was 1.7,'' she said. "We are running parallel to the US economy. The inflation rate is within the same ballpark.'' Prices in the fuel and power sector increased 1.5 percent in June compared to May, the largest monthly change in the nine sectors making up the consumer price index.

"This upward movement was in response to a 33.2 percent rise in the fuel adjustment clause, which increased for the first time this year,'' the Statistics Department reported.

Even with the hike, prices in the fuel and power sector have actually decreased 3.6 percent over the past 12 months.

In June, prices in the food sector rose 1.1 percent during the month.

"This reflected a 2.9 percent increase in the cost of meals bought from restaurants and cafes,'' Statistics stated. "However, this increase was partially offset by a decline (-0.04 percent) in the cost of food purchased from grocery stores.'' Year over year inflation in the food sector was 2.5 percent at the end of June.

The rent sector, which accounts for 27.6 percent of the consumer price index, advanced 0.5 percent during the month and 2.2 percent over the year.

"Since the rental sector accounts for a over a quarter of the index's weight, a movement in the rental sector is going to have a strong impact on the index,'' the spokesperson said.

Prices in the health and personal care sector rose 0.2 percent during June and 4.7 percent during the 12 months to the end of the month. During June the average price of prescription medicines rose 3.1 percent, according to the Statistics Department.

For the month the household goods, services and supplies sector advanced 0.1 percent, while prices in the transport and vehicles sector on average fell 0.1 percent.

Average prices in the clothing and footwear, tobacco and liquor, and education, recreation and reading sectors remained the same on average during June.

See the accompanying table for the annual rate of inflation for the nine sectors and their weights in the makeup of the index.

By comparison among the G-8 nations, France had the lowest annual rate of inflation in the 12 months to the end of June of 0.8 percent, while the UK registered a high of 2.8 percent.

Just be thankful you don't live in Mexico, which is suffering a 14.97 percent annual inflation rate, or in Turkey where prices are almost double those in the 12 months to the end of June.

Finance Minister Dr. Grant Gibbons said Bermuda's current inflation rate was "good news'' for consumers, businesses and those on fixed income. A stable rate was a boon.

"The rate is low and stable,'' he said. "It's positive because our economy has been growing at a fairly healthy rate. The fact that our inflation rate only continues to come down is positive news for everybody.'' However he cautioned workers and employers to keep wage hikes within the range of inflation as there was a danger increases above the rate could have the effect of driving inflation up.

Workers in some sectors are getting increases of about three percent, he said.

Government workers who are members of the Bermuda Industrial Union recently received a 2.98 percent wage increase after arbitration.

"Increases at a higher rate (than the rate of inflation) could have a knock on effect,'' he said. "We need to be moderate as it affects the cost of living.'' Consumer Price Index Sector Annual Inflation Rate Index Weighting Food 2.5% 15.2% Rent 2.2% 27.6% Clothing & footwear 1.8% 4.7% Tobacco and Liquor 0.3% 2.1% Fuel & Power -3.6% 3.3% Household goods 0.8% 17.5% Transport & vehicles 1.7% 13.5% Education, recreation 3.0% 8.0% Health, personal care 4.% 8.1% BUSINESS BUC