Customers saw their fuel and power bills rocket by a staggering 14 percent between August and September as the annual inflation rate hit a 17-year high of 5.9 percent, according to the latest statistics released by Government.

The cost of electricity was the driving force behind the 12-month increase in the Consumer Price Index (CPI), as revealed by the Department of Statistics' CPI report, with Belco bills being impacted by a hike in the fuel adjustment clause as the annual rate of price increase for the fuel and power sector reached 40.4 percent.

But Belco said there will be some relief for its customers next month, when the fuel adjustment rate will be cut by 7.3 percent – to 19 cents per kilowatt hour from 20.5 cents in December. Belco expects further adjustments in the New Year.

The Island's main energy provider said it buys blended oil to meet engine and environmental standards and the price of the fuel includes customs duty of $15.10 per barrel, transport, wharfage and handling.

The September fuel adjustment rate increased by 33 percent from the July and August rates of $15.50 per kilowatt hour.

In July, Belco brought in 130,000 barrels of oil when the cost of crude oil cost $146 per barrel.

That supply is expected to last for three-and-a-half months, from the end of August into December.

Last week, a new batch of oil arrived on the Island, which was purchased when the cost of oil was $126 per barrel.

However the reduction in fuel adjustment rate is not in line with the world price of a barrel of oil, which has fallen by about 60 percent to a 20-month low of $56.16 yesterday.

The Government report said that the rise in inflation was the highest since the 6.2 percent increase in February 1991, with the average cost of goods and services in the CPI jumping 1.1 percent between August and September.

Consumers paid a surcharge of 20.5 cents per kilowatt hour, but they should expect some relief from higher costs in the near future as the world price of a barrel of oil started a downward trend in July 2008.

The transport and vehicles, and food sectors also contributed greatly to the annual rate of inflation, with price shifts of 6.6 percent and 6.2 percent respectively compared to the same period last year.

Gas prices climbed above $2 per litre in September, marking a three percent increase for both premium and mixed blends, while the average price of vehicles also rose 2.6 percent due to the effect of the weak US dollar.

But this was offset by foreign transport costs, including airfare and hotel rates, dropping 0.2 percent and Government-subsidised bus fares for students, as the transport and vehicle sector edged down 0.1 percent on last month.

Other highlights included the food sector, which hit shoppers with a 0.4 percent increase in September, including big hikes in poultry products (7.4 percent), frozen peas (5.7 percent) and bagged apples (4.3 percent).

Tenants also paid out more in rent as that sector advanced 0.1 percent, mainly due to a 0.4 percent rise in rent-controlled properties as home owners continued to carry out improvements on their housing stock.

There was no relief for smokers or drinkers either, as the tobacco and liquor sector climbed 0.5 percent, most notably hitting the pockets of wine (1.3 percent), beer (0,4 percent) and spirits (0.1 percent) consumers during the month.