Monday, November 30, 2015   

Prices plunge 3.6pc as job worries bite

staff reporter

Wednesday, January 23, 2002

HONG Kong's consumer prices slid 3.6 per cent in December from a year

earlier as the government waived public-housing rental payments and

rising unemployment deterred spending.

This outstripped the decline of 1.4 per cent in November, the

government said. The plunge was also well above the 1.5 per cent

decline tipped by analysts.

Prices have plummeted for 38 straight months, taking the index to

95.3, after layoff fears and frozen wages stifled consumer spending,

forcing retailers and landlords to keep a lid on prices. The Consumer


Price Index (CPI) was 97.6 in November.

The much larger year-on-year decline in the CPI for December, compared

with November, was attributed to the waiver of public housing rentals

by the Housing Authority and Housing Society, the Census and

Statistics Department showed. The government gave tenants in public

housing projects a one-month exemption from rental payments in

December to spur consumer spending as economic growth stalled.

That caused housing costs, which make up about a third of the index,

to fall 8.7 per cent from a year earlier.

Prices of home appliances and other durable goods fell 7 per cent from

a year earlier, the report showed. Food costs, which make up about a

third of the price index, declined 2 per cent.

Declines were recorded in all indices of the CPI, which reflected

subdued price conditions amidst the poor economic situation and a fall

in import prices, a government spokesman said.

Unemployment edged to 6.1 per cent in December, a two-year high, as

companies such as HSBC Holdings and Pacific Century CyberWorks shed


"Rising joblessness and shrinking retail sales are undercutting

prices on the demand side," said Michael Kurtz, an economist at Bear

Stearns Asia in Hong Kong. For 2001, prices declined 1.6 per cent,

today's report showed.

Hong Kong's economy, which is expected to post zero growth last year,

may have to fall further. Chief Executive Tung Chee-hwa forecast

earlier this month that gross domestic product will probably shrink in

the first half of 2002, delaying a rebound in prices.

HSBC, Europe's biggest bank by market value, fired 70 Hong Kong staff

last month and said more layoffs may follow as growth stalls.

CyberWorks, the territory's biggest phone company, sacked 506 workers,

or 3.6 per cent of its staff, citing tougher competition.

Job cuts have continued this year with the Bank of East Asia, Level 3

Communications and Eastman Chemical all saying this month that they

plan to reduce their payroll in Hong Kong.

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