Energy inflation: the fuel adjustment rate rose 21 per cent on Belco bills in April
Tourism rebound on the cards, inflation starts to bite and retail stuck in down trend
- Tourism looks set for a strong rebound in the coming months, bringing relief to the most pandemic-ravaged sector of the economy. Hotels have reported strong bookings for the season ahead, especially around the SailGP event in May. Data and commentary from the Bermuda Tourism Authority and the Bermuda Hotels Association, as well as those marketing vacation rentals, suggest that visitors cannot wait to return to the island, with May’s SailGP event a major attraction. The cruise ship schedule for 2022 lists 182 prospective planned visits, only 5 per cent behind 2019 and a massive jump from last year’s 36 visits. While this will bring hope to the dozens to dozens of tourism-related businesses who have suffered over the past two desperate seasons, the potential for Covid-related disruptions is not yet behind us.
- The Fairmont Southampton redevelopment appears to be back on track. David Burt, the Premier and Minister of Finance, said in his Budget Statement that the Government planned to extend the duration of tax breaks given to Gencom, owners of the island’s largest hotel, in order to ensure that the $200 million renovation goes ahead. Apart from the hundreds of hotel rooms and more than 700 jobs that a reopening would bring, the construction industry also stands to benefit. Beyond the refurbishments, Gencom plans to build an unspecified number of residential units on land close to the hotel under a Special Development Order that was granted in 2009 and is still in effect.
- Retailers took less at the tills during the crucial Christmas shopping season, figures released in March by the Department of Statistics indicated. Sales volume was down by 8.8 per cent in December 2021, following a similar drop in November. December was the sixth successive month of sales volume decline, a trend that has coincided with the double-digit increases seen every month in 2021 in the value of goods brought in from overseas by residents. A return to travel as pandemic restrictions eased may be a significant factor. These trends are concerning for an industry that is a major provider of Bermudian jobs.
- Inflation, which is running at four-decade highs of 8.5 per cent in the United States in the year through March, is inching higher in Bermuda. The Department of Statistics’ Consumer Price Index indicated an inflation rate of 2.5 per cent in the year through January. The cost-of-living pressures are unlikely to ease. Global supply chain disruptions and materials shortages have impacted the prices of many goods. A spike in oil prices, driven by sanctions on major producer Russia, will apply further pressure on travel and energy prices especially. Belco increased its charges in April, as the fuel adjustment rate surged by a whopping 21 per cent from 15.572 cents per kilowatt hour to 18.9 cents. Inflation’s upward trend seems likely to continue.
- The Bermuda Risk Summit was held in March – the first in-person insurance industry event on the island since 2019. Demand was clearly high as the sold-out conference attracted 350 delegates, including 80 from overseas. With the Bermuda Climate Summit, Bermuda Captive Conference and ILS Bermuda’s Convergence event all scheduled for later in the year, the island’s economy is set for a business travel boost.