June CPI rises 6.1% to 11-year high
Updated: 2008-07-22 07:31
By Lillian Liu(HK Edition)
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Escalating private rentals, food and energy prices have bolstered Hong Kong's consumer prices to an 11-year-high.
Economists say the residential rents and traffic fares will add the most pressure on household spending, as food prices peaked in the second half.
The overall consumer price index (CPI) rose by 6.1 percent in June over a year earlier. There was a large year-on-year increase in food and energy costs, while prices in durable goods showed a year-on-year decline, the Census and Statistics Department (C&SD) announced yesterday.
Paul Tang, chief economist at Bank of East Asia, said the city's CPI will drop to as low as 3 percent in the second half and he forecasted the figure for the entire year will be 4 percent.
"Food prices are likely to reach a peak because the food-driven inflation on the mainland is slowing down," he said. "The biggest pressure on the CPI for the next six to 12 months will come from private housing rental and energy-related costs."
The housing takes up some 29 percent of Hong Kong families' expenses, Tang added.
A government spokesman said that the inflation outlook for the rest of the year remains uncertain, due to the volatile international food and energy prices.
The pace of economic expansion in the period ahead will also affect the extent of the domestically generated inflationary pressure. Nevertheless, the relief measures announced in the 2008-09 budget, and by the chief executive last week, will help lower the headline inflation notably in the latter part of 2008, he said.
According to C&SD, the price of rice jumped 64 percent year-on-year, the highest among food items, while beef prices soared over 51 percent and pork 48 percent.
Lee Kwong-lam, vice chairman of the Hong Kong and Kowloon Provisions, Wine and Spirit Dealers' Association, said: "I don't think the rice price will jump further. At the moment, we pay HK$560 to import 50 kilograms of rice from the mainland, but the price goes up to HK$700 if we import 50 kilogram from Thailand".
Suppliers on the mainland and in Thailand will stick to the current price, Lee said.
Citigroup said in a statement yesterday that the firm maintains its view that, barring any serious weather disruptions, Hong Kong's inflation rate is likely to stabilize. A slowdown of the domestic economy and a stable US dollar will help Hong Kong avoid runaway inflation.
The bank also expects the underlying inflation rate to return to the range of 5-6 percent in the coming months. "We keep our forecast of Hong Kong's inflation rate unchanged at 4.4 percent in 2008," it said.
(HK Edition 07/22/2008 page2)