Hong Kong Inflation December 2016

Hong Kong

Hong Kong: Inflation steady at over six-year low

January 23, 2017

Inflation was steady for the second straight month in December at November’s 1.2%, which is the lowest reading since July 2010. December’s figure reflected a decline in prices for clothing and footwear products and for durable goods. Conversely, prices for transport and food continued to increase. Private housing prices also rose in December, which suggests that recent efforts by the government to curb property prices are, for the time being, failing to yield results.

A government spokesman suggested that, looking ahead, “inflation risks should remain contained in the near term, given the soft import prices and tame local cost pressures”. However, 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, which have been benefiting from negative interest rates.

For the three-month period from October to December, the average of the month-on-month variations in consumer prices came in at 0.2% in seasonally-adjusted terms, which was a notch below the 0.3% variation seen in the three months up to November. Meanwhile, annual average inflation was 2.4% in December, which was slightly below November’s 2.5% reading.

FocusEconomics Consensus Forecast panelists expect inflation to average 2.1% in 2017, which is unchanged from last month’s forecast. For 2018, the panel expects inflation of 2.3%.

Author:, Economist

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Hong Kong Inflation Chart

Hong Kong Inflation December 2016

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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