Hong Kong: Inflation gains steam in May

Inflation picked up to 2.1% in May, from 1.9% in April. However, when accounting for the effects of one-off government relief measures, inflation reached 2.4%. The acceleration was largely due to moderating price increases for package holiday tours and private housing rentals.

For the March–May period, the average of the month-on-month variations in consumer prices was 0.1% in seasonally-adjusted terms, down from the 0.2% average increase seen in the three months up to April. Meanwhile, annual average inflation edged up to 2.0% in May, from 1.9% in April.

A government spokesperson noted that:

“Looking forward, inflationary pressure will likely go up in the period ahead, in view of the robust economic conditions and continued feed-through of earlier rises in fresh-letting residential rentals. Nevertheless, inflation should stay within a moderate range for the year as a whole. The Government will continue to monitor the situation closely, particularly the impact on the lower-income people.”

Hong Kong Inflation Forecast

FocusEconomics Consensus Forecast panelists expect inflation to average 2.2% in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, the panel expects inflation to average 2.3%.