Hong Kong: Inflation sinks lower at outset of the year
Inflation dropped to 1.4% in January from 2.9% in December. When accounting for the effects of one-off government relief measures, inflation was markedly higher at 3.7%, up from December’s 2.9%. The downturn was primarily driven by lower utilities prices, while clothing and footwear, and housing costs also fell. However, food costs remained elevated in January, tempering the overall decline.
For the November–January period, the average month-on-month increase in consumer prices in seasonally-adjusted terms was minus 0.5%, contrasting the 0.1% average increase in the three-month period ending in December.
Looking ahead, inflation should average lower in 2020 than in the previous year as sluggish economic growth and an uptick in unemployment weigh on prices. However, rising food costs, driven by elevated pork prices in the wake of the African swine flu outbreak in China, will continue to provide some offsetting upside price pressures going forward.