Upside risk to inflation remains
Hong Kong's consumer price index (CPI) rose 1.6 percent in September over the corresponding period in 2006. Economists predict the core inflation will exceed 3 percent for the whole year in view of the weak greenback.
The year-on-year increase in September was the same as August's, though food prices increased from 4.6 percent to 6 percent.
Eggs recorded the biggest rise in price among food items, increasing 32 percent year-on-year. Canned meat, poultry, beef and frozen meat saw 30.4 percent, 27.8 percent, 26.1 percent and 15.8 percent surges respectively. Food accounts for nearly 30 percent of Hong Kong's CPI.
On the other hand, year-on-year declines in prices were recorded for durable goods and electricity, gas and water.
As for housing, the CPI rose only by 0.3 percent over a year earlier and fell by 2.6 percent as compared with August because of the rates concession and the public housing rental cut offered by the government.
DBS Bank (HK) senior investment strategist Daniel Chan said prices of food from the mainland remained high. "Since the US dollar is weakening, food prices won't ease until next year," Chan said, predicting that full-year core inflation will surpass 3 percent. "We see the pressure is still mounting and the inflation is likely to climb as high as 4 percent in 2008."
A government spokesman said that given the strength of the economy in recent years, inflation was relatively low. The headline inflation is expected to go up in the fourth quarter as a result of the favorable effects of the rates concession fading out.
(China Daily 10/25/2007 page15)
