Hong Kong: Inflation inches up at the outset of the year
February 21, 2017
Inflation rose slightly from December’s 1.2% to 1.3%. January’s figure reflected higher prices for food and transportation, while costs for electricity, gas and water continued to decline. Housing prices increased at a modest pace in January as public housing rents continue to decline. Overall, January’s higher inflation reading reflects spillovers from the Lunar New Year holidays, which fell in January this year but in early February in 2016.
A government spokesman suggested that, looking ahead, “inflationary pressures should stay contained in the near term, given soft import prices and moderate local cost increases”. The ongoing normalization of the U.S. interest rate will add further downward pressure on consumer prices, particularly housing and rental, on the back of a correction in Hong Kong’s residential property prices.
For the three-month period from November to January, the average of the month-on-month variations in consumer prices came in at 0.1% in seasonally-adjusted terms, which was a notch below the 0.2% variation seen in the three months up to December. Meanwhile, annual average inflation was 2.3% in January, which was slightly below December’s 2.4% reading.
Author: David Ampudia, Economist