Deflation rears head after three years

Hong Kong saw deflation for the first time in three years in July, with the consumer price index falling 2.3 percent year-on-year.

The index fell for the first time since February 2017, data from the Census and Statistics Department showed. An increase of 0.7 percent was recorded in June.

The decrease in July was mainly due to the government's payment of public housing rent and the Hong Kong Housing Society's July two-third rent waiver for Group B estates tenants.

Netting out the effects of all the government's one-off relief measures, the year-on-year rate of increase in the Composite CPI in July was 0.2 percent, mainly due to decreases in the costs for meals bought away from home, the first decline since early 2004, and the enlarged decreases in local transport fares.

The fall in transportation prices enlarged visibly due to the extra MTR fare rebate starting from July.

Furthermore, the fall in transportation prices dragged down the performance of transportation companies.

Transport International (0062) incurred a net loss of HK$51.8 million for the first half, compared with a gain of HK$302 million a year ago, without declaring an interim dividend.

Its flagship company, Kowloon Motor Bus, recorded a loss of HK$24.9 million after taxation, compared with a gain of HK$167.7 million a year ago. The loss was primarily due to the decrease in fare revenue amid the Covid-19 pandemic, though partially offset by government subsidies and a decrease in fuel costs.

Its transport operations in the mainland reported an after-tax loss of HK$97.5 million for the first half, compared with a profit of HK$2.3 million a year ago.