Bermuda becoming more competitive

The Bermuda inflation rate fell in February, according to new figures from the Department of Statistics, and that is very good news.Image

The February Consumer Price Index shows the annual rate of inflation fell to 1.7%. The main upward driver was health, at 7.7% year over year, although prices actually fell compared to January. Otherwise, increases were low. Inflation has now been below 2% since April, 2013.

To be sure, the world is in a low inflation period, and Bermuda’s inflation rate remains higher than the US and Canada (both at 1.1%). But the slowdown in price increases is good both for local consumers and for the island’s competitiveness. It often does not feel like prices are slowing or declining when you’re paying the monthly bills, but the truth is that we are paying the same or less for many items.

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2 Responses to Bermuda becoming more competitive

  1. Deonion says:

    Be mindful of the difference between cost push inflation (bad) and demand pull inflation (good).

    Much of Bermuda’s relative wealth is a result of things that have caused demand pull inflation and the resulting virtuous increase in wages, profits, and wealth.

  2. Indy says:

    That’s a very fair point. However, you can have too much of a good thing and if:
    Your costs end up being well out of line with your competitors; and
    Your costs start to exceed the quality of your services, then it’s a problem.
    To be sure, it’s great to be in a position where you can say this is our price and we’re sticking to it, but if that’s a result of complacency, or if standards slip, then you can lose your competitive advantage very quickly. I think that’s exactly what happened to tourism in the late 1980s and 1990s and what has happened to international business in the last ten years.

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