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Consumer prices jump 6.1pc on festive cheer

Karen Ha

Tuesday, February 21, 2012

Inflation hit a new high last month, and Lunar New Year spending was to blame for a jump that came after five months of stable readings.

The composite consumer price index rose to 6.1 percent year on year, the biggest jump in the past six months.

Inflation soared to 7.9 percent in July before settling between 5.7 and 5.8 percent from August to December.

Excluding the effects of all one-off budget relief measures such as electricity subsidies, the rate of increase was 6.7 percent year on year, compared with 6.4 percent from September to December.

Higher prices for package tours, meals bought away from home as well as fresh marine products all contributed to the jump in inflation.

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Food costs increased 8.2 percent from a year ago, while private housing rents jumped 9.7 percent.

Spiking the figures for alcoholic drinks and tobacco, which was hit by a 19.5 percent leap in prices, was the hike in tobacco duty by 41.5 percent.

A government spokesman said consumer prices should edge down as global food and commodity prices retreat.

Slowing economic growth is also expected to bring inflation down to more manageable levels.

As the jump in inflation was due to Lunar New Year falling in January this year and February last year, it would be more meaningful to examine data for January and February combined, the spokesman added.

HSBC (0005) Greater China economist Donna Kwok said the inflation reading is within expectations.

"A higher base effect, cooling mainland inflation and slower global demand should keep Hong Kong's inflationary pressures in gentle decline for a few more months."

Raymond Yeung Yu-ting, senior economist for Greater China at ANZ Research, said inflationary pressure is unlikely to ease in the first quarter, as more funds flow into the markets.


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