The Bahamas is widely recognized as one of the most expensive places to live in the Western Hemisphere, a reality driven primarily by its geography and economic structure. As an archipelago nation, the country relies heavily on imports for nearly all consumer goods, food, and fuel, which significantly inflates the final cost of living for residents. This high cost is further compounded by the substantial expenses associated with energy generation and distribution across the many islands. While the capital, Nassau on New Providence, offers the most amenities, it also presents the highest concentration of costs, with prices generally decreasing but still remaining elevated on the more remote Family Islands.
Housing and Utilities
Housing represents the largest monthly expenditure for residents, with costs varying dramatically based on location and property type. A one-bedroom apartment in a desirable area of Nassau, such as the city center, rents for approximately $1,300 to $1,600 monthly. Luxury rentals, often targeting expatriates, can easily exceed $3,000 per month. Renting on the Family Islands is generally more affordable than in Nassau, though the selection is much more limited.
The cost of utilities is a major driver of the high cost of living, particularly for electricity provided by Bahamas Power and Light (BPL). Electricity rates are substantially higher than in North America because the country relies on imported diesel fuel to power its generators. The total cost per kilowatt-hour (kWh) includes a base tariff and a variable fuel surcharge that fluctuates with global oil prices. Recent fuel charges have been around 19 to 22 cents per kWh for higher consumption tiers, often two to three times the average rate in the United States.
Air conditioning, a necessity in the tropical climate, can lead to exceptionally high monthly electricity bills, sometimes reaching thousands of dollars for larger homes. Water costs are also a factor, as much potable water is produced through energy-intensive reverse osmosis desalination plants. Internet and cable services are generally reliable in major areas, but monthly subscription fees for high-speed packages are expensive compared to international benchmarks.
Groceries and Dining Out
The cost of groceries is significantly marked up because the vast majority of non-local food items must be imported, incurring freight, insurance, and high import duties. Common staples like milk, bread, and packaged goods can be 30% to 100% more expensive than in mainland North America. For example, a loaf of bread or a liter of milk can cost over $4 or $5, respectively, in Nassau supermarkets. Residents must budget for this substantial price difference on nearly all dairy, processed foods, and out-of-season produce. More reasonable costs are typically found in locally sourced items, such as fresh seafood and certain seasonal fruits and vegetables.
Dining out reflects high costs, with restaurant prices comparable to or exceeding those in major international cities. A casual meal for one at a mid-range restaurant can cost around $35, and dinner for two at a fine dining establishment often exceeds $100. An automatic service charge, or gratuity, typically ranging from 15% to 20%, is frequently added to the bill.
Transportation and Inter-Island Travel
Acquiring a personal vehicle is a major expense due to the high import duties levied on cars. These duties can range from 10% to 65% of the vehicle’s value, depending on its size and engine capacity, making the final purchase price substantially higher than in other markets. Gasoline prices are also elevated because the fuel is imported, adding to the recurring cost of car ownership.
For daily commuting in Nassau, privately operated buses, known as jitneys, offer a relatively inexpensive fare for fixed routes. However, the jitney system is limited primarily to New Providence and does not service all areas or run late into the evening. Taxis are readily available but are expensive, with short rides often costing $15 to $30, making them impractical for regular use.
Travel between the islands represents a significant, recurring expense. Inter-island travel is accomplished either by domestic flights or by ferry services connecting New Providence to the major Family Islands. Scheduled flights are the fastest option but are costly. Ferry services are more economical but take several hours and operate on limited schedules. For frequent travelers, the cumulative cost of airfare or ferry tickets can quickly become a substantial part of the monthly budget.
Taxes, Import Duties, and VAT
The Bahamian tax structure is designed to attract international business and residents by not imposing several common forms of taxation. The country does not levy personal income tax, corporate tax, capital gains tax, or inheritance tax. This absence of direct taxation is offset by a system of high consumption taxes that drive up the cost of nearly all goods and services.
The primary consumption tax is the Value Added Tax (VAT), currently set at 10%, and applied to most transactions, including goods, services, and rentals. This tax is added at the point of sale, increasing the final price of imported items. The other major revenue generator is the system of import duties applied to goods entering the country. Duties vary widely, ranging from 0% for essential items to over 200% for luxury goods, though most common items fall between 5% and 35%. These duties are calculated on the total landed cost of the item, including the purchase price, freight, and insurance. The combination of high import duties and the 10% VAT makes nearly everything in the Bahamas significantly more expensive than in other countries.