Hong Kong’s headline inflation stands at 4.3 pct, inflation pressure to remain contained in near term

Hong Kong’s consumer price index inflation accelerated 4.3 percent year-on-year in August, as compared with the rise of 2.3 percent in July, according to the Census and Statistics Department. The huge change in the CPI in the month was mostly because of low base effect resulted from Government’s payment of public housing rentals in August 2015.

Netting out the impacts of all Government’s one-off relief measures, the year-on-year rate of rise in the composite CPI in August was 2.1 percent, a tad more than from July’s 2 percent. This was mostly because of the low base of comparison resulted from the special fuel rebate in electricity beginning from mid-August 2015, stated the Census and Statistics Department.

Amongst various CPI components, year-on-year rises in prices were registered in August for housing, which rose 9.5 percent, mainly because of low base of comparison. Also, increases were seen in electricity, gas and water, alcoholic drinks and tobacco, miscellaneous goods, food and transport. Meanwhile, decline in prices were seen in durable goods and clothing and footwear.

According to a government spokesman, the underlying inflation, which netted out the impacts of the government’s one-off relief measures, remained moderate in August, at 2.1 percent year-on-year. This is similar to July’s 2 percent. The spokesman stated that the notably higher year-on-year headline inflation rate was mainly because of base effect, which would be for temporary time and not impact the inflation trend in the remainder of the year.

The spokesman added that inflation pressure in the near term should continue to be contained, given weak import prices and moderate increases in local costs. The government is expected to continue keeping a close watch on the developments of inflation, especially its impact on lower-income people.