Rocketing food prices and continued high electricity costs kept inflation comfortably above five percent in October.

The Consumer Price Index, released yesterday, showed inflation hit 5.6 percent, slipping back slightly from the 17-year high of 5.9 percent recorded in September.

The continuation of high fuel adjustment fees on Belco bills meant that the fuel and power sector saw a 40 percent increase from October 2007.

Food prices jumped by 7.9 percent year on year and were up by an unusually high two percent from September. Though the price of crude oil has plummeted by more than 60 percent from its high of $147 a barrel last July — yesterday it was trading at $49 a barrel — consumers have yet to see the advantage of that on their electricity bills.

Belco bought a shipment of fuel in July, at a time when the crude oil price peaked, which was expected to last into this month. Last month, the company took delivery of a new batch of fuel, which was purchased when the cost of oil was $126 per barrel.

However, this month Belco has said customers will see a 7.3 percent fall in the fuel adjustment rate, to 19 cents per kilowatt hour from 20.5 cents, and expects to make further adjustments in the New Year.

Motorists have enjoyed a more immediate benefit from falling oil prices. CPI figures showed that the price of premium gasoline plunged 14.2 percent in October, helping the transport and vehicle sector to a 3.4 percent monthly fall. Air fares also fell, as did hotel rates, meaning foreign travel costs fell 2.5 percent for the month.

The food sector's two-percent monthly rise in prices was the steepest recorded in recent years. The CPI report, produced by the Department of Statistics, said the main drivers were cooking oil (up 10.5 percent), bagged potatoes (9.4 percent) and flour (6.7 percent). Clothing and footwear saw the same annual price rise as food — 7.9 percent. The monthly rise was 1.1 percent overall, as consumers paid 1.3 percent more than they did for women's clothing than in September and 0.7 percent more for men's clothes.

Rent, which rose by 2.6 percent from October 2007, also contributed much to the rising cost of living. The rate of inflation in most western countries is now slowing, as plunging energy costs and a severe economic downturn take effect. Bermuda's rate of inflation was significantly higher in October than the US (3.7 percent), the UK (4.2 percent) or Canada (2.6 percent).