Hong Kong Inflation

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Hong Kong: Inflation inches down to 17-month low in June

July 21, 2014

Annual inflation inched down from 3.7% in May to 3.6% in June, which represented the lowest rate since January 2013. The print just undershot the 3.7% market analysts had expected. According to the Census and Statistics Department, the result was mainly driven by lower price increases in housing, the electricity, gas and water category as well as in clothing and footwear.

In June, consumer prices rose 0.2% over the previous month in seasonally-adjusted terms, which was in line with the increase recorded in the previous month. As a result of the softer year-on-year increase, annual average inflation inched down from the previous month’s 4.4% to 4.3% in June.

A government spokesman stated that, “inflationary pressures continued an easing trend,” mainly due to, “a moderated rise in private housing rentals and the rather modest imported inflation.” In addition, the spokesman noted that, “looking ahead, the upside risks to inflation should remain limited in the near term, as the slower private rental increases in recent periods will continue to feed through to consumer prices and as external price pressures are likely to remain contained.“

The government expects inflation to reach 4.6% in 2014. FocusEconomics Consensus Forecast panelists expect inflation to average 3.8% in 2014, which is down 0.1 percentage points from last month’s forecast. For 2015, the panel expects annual average inflation to moderate to 3.4%.

Author: Ricard Torné, Lead Economist

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Hong Kong Inflation Chart

Hong Kong Inflation June 2014

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

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