Five months of falling inflation ended in December when the annual rise in the cost of living climbed to 3.4 percent.

Figures released by Government yesterday, showed the figure jumped from November?s 2.6 percent rate.

Rent was the biggest contributor to the increase in prices since December 2005, while the cost of health and personal care also climbed significantly.

Finance Minister Paula Cox said yesterday Government was always concerned about any rise in the inflation rate and that the January rate would be closely monitored.

But she said it needed to be viewed in perspective next to the drop in inflation recorded the previous month and the tendency for monthly fluctuations within the rate.

The Consumer Price Index (CPI), which is based on the cost of a range of goods and services that most householders need, is a statistical tool used to monitor the rate of inflation. Rising inflation diminishes the purchasing power of a given sum of money.

December?s 3.4 percent figure means that the CPI?s ?basket? of goods and services cost 3.4 percent more than it did a year earlier. Inflation had been falling for the previous five months.

Bermuda?s December inflation rate compares well with the UK, where prices rose 4.4 percent year on year, but not so well with the US (2.5 percent) and Canada (1.6 percent).

The average inflation figure for 2006 was 3.1 percent, slightly lower than both the US (3.2 percent) and the UK (3.2 percent), but higher than Canada (2 percent).

Rents rose 4.4 percent in the rent-controlled sector and 4.7 percent in the open market over the 12 months up to December 2006. Health and personal care costs rose 6.8 percent, while the transport and vehicles sector saw a 2.6 percent increase.