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Hong Kong’s headline inflation accelerates in September, likely to see mild upward pressure in rest of 2018

Hong Kong’s headline inflation accelerated on a year-on-year basis in the month of September. The Census and Statistics Department showed that the overall consumer prices rose 2.7 percent in the month, larger than the corresponding rise of 2.3 percent in August. Stripping the effects of all Government’s one-off relief measures, the year-on-year rate of rise in the composite CPI in September came in at 3.1 percent. This rise was also larger than that in August 2018, mainly because of the rises in school fees and the upward adjustment in public housing rentals.

Amongst the several CPI components, the year-on-year rises in prices were seen in food, electricity, gas and water; housing; miscellaneous services; meals bought away from home; clothing and footwear; alcoholic drinks and tobacco; miscellaneous goods and transport. On the other hand, durable goods saw a year-on-year decrease in prices.

The composite CPI for the initial 9 months of 2018 rose 2.3 percent year-on-year. Excluding the effects of all Government’s one-off relief measures, the Composite CPI rose 2.5 percent. In the third quarter, the composite CPI rose 2.5 percent year-on-year.

According to a government spokesman, the underlying inflation rate rose to 3.1 percent in September, mainly due special factors including the upward adjustment in public housing rentals and rise in school fees as the effects of the government subsidy schemes introduced a year earlier dissipated.

“Looking ahead, the inflation rate may still be subject to some mild upward pressure in the rest of the year, as local costs have increased along with the sustained economic expansion, and as the earlier rises in fresh-letting residential rentals would also continue to feed through”, added the government spokesman.

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