Hong Kong: Inflation moderates sharply in February
March 22, 2012
In February, consumer prices dropped 0.2% over the previous month, which contrasted the 0.9% increase recorded in January. According to the statistical institute, lower prices for clothing and footwear as well as for services were the main drivers behind the monthly drop. Annual inflation fell to 4.7% in February from 6.1% in January, exceeding market expectations which had inflation moderating to 5.2%. However, the reading was influenced by a base effect due to the Lunar New Year celebration, which had led inflation to spike in January. Despite the decline, annual average inflation inched up from 5.5% in January to 5.6% in February. A government spokesman stated that ?with global food prices peaking out since early 2011 as well as a slowing local economy, inflation is expected to come down over the course of 2012.? The government expects headline inflation to moderate to 3.5% this year.