Hong Kong Inflation

Hong Kong

Inflation moderates markedly in January

In January, annual inflation fell to 3.0% from the 3.7% tallied in the previous two months. The reading fell short of market expectations of a 3.2% rate and marked, in fact, the lowest level seen since July 2012. According to the statistical institute, the monthly print was mainly influenced by higher prices for housing, food as well as for electricity, gas and water. That said, prices in January also reflected a seasonal effect stemming from the Lunar New Year holidays, which fell last year in late January but this year in mid-February. As a result of the moderation observed in January, annual average inflation eased from 4.1% in December to 3.8% in January.

A government spokesman stated that inflation is likely to remain contained in the near term, mainly due to weak economic performance at home and a more benign increase in import prices. That said, "further down the road, the volatility of international food and commodity prices amid the global liquidity glut, coupled with the rise in local housing rentals over the past year, may pose some upside risks to inflation".

FocusEconomics Consensus Forecast panellists expect inflation to average 3.9% in 2013, which is unchanged from last month's forecast. For 2014, the panel expects annual average inflation to moderate to 3.6%.

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Hong Kong Inflation Chart

Hong Kong Inflation January 2013

Note: Year-on-year and annual average variation of consumer price index in %.
Source: Census and Statistics Department Hong Kong.

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