But last night the Finance Minister said the increase would be tiny.

The Hon. David Saul forecast a rate under 2.5 percent over the next six months.

"The signs for the economy are looking good,'' said Dr. Saul.

Last week it was revealed inflation had stayed at 2.1 percent for the second month in a row.

Prices edged up for household appliances, magazines, pet foods, and over-the-counter medicines.

But there were percentage drops of 0.4 and 0.3 in food and fuel.

Dr. Saul expected the rate to remain the same next month. It would then rise slightly.

"We are looking at a figure around the low twos in the coming six months.'' Belco said last week electricity bills were set to rise $3 a month on average.

The 2.75 percent hike would kick in on January 1.

A sharp rise in freight rates was also announced, triggering fears of higher prices in stores.

Rates on container ships Bermuda Islander and Oleander will increase by 7.5 percent on January 8 and 1 respectively.

Said Dr. Saul: "I don't think we are going to see any great effect on inflation as a result.

"The Belco charges are thought likely to cause inflation to rise by two-tenths of one percent.

"We have to watch to see what the effect of freight rates are. It is expected to be minor.'' Dr. Saul pointed out inflationary pressures were cancelled out by other factors.

These included low interest rates, and the price of oil dipping to below $15 a barrel.

Dr. Saul added tourism -- one of the mainstays of Bermuda's economy -- was also picking up healthily.