Hong Kong: Inflation stable in May
June 20, 2017
Inflation was stable from a month earlier at 2.0% in May. For another month, the print was due to higher food and transport prices. Housing prices, especially public housing rents, once again notably increased.
A government spokesperson noted limited external price pressure and the ongoing steady increase in local costs. “As these developments are likely to sustain in the near term, the upside risks to inflation should remain contained in the coming months,” added the spokesperson. Ongoing normalization of U.S. interest rates is likely to add downward pressure to consumer prices in the coming months, particularly private housing rents, as an expected capital flight corrects Hong Kong’s residential property prices.
For the three-month period from March to May, the average of the month-on-month variations in consumer prices was 0.3% in seasonally-adjusted terms, which was a notch higher than the 0.2% average increase seen in the three months up to April. Meanwhile, annual average inflation was inched down to 1.7% in May (April: 1.8%).
Author: Christopher Thomas, Economist