Consumer price rises step up the pace

Hong Kong consumer prices rose by 1 percent in May from a year ago, faster than 0.8 percent in April, says the Census and Statistics Department.

Taking out the effects of all the government's one-off relief measures, the increase in the composite consumer price index was 0.2 percent, larger than 0.1 percent in April.

The larger increase was mainly due to the higher costs of dining out and takeaway food as well as the smaller decreases in the prices of fresh vegetables, the government said.

Carie Li Ruofan, the economist of OCBC Wing Hang Bank, predicted that the inflation rate in May would rise to 1.2 percent, and the recent high inflation in the United States and other economies may not have much impact on Hong Kong for the time being.

She said inflation in the US and the mainland was driven by different factors.

The large increase in air ticket prices drove inflation in the US in May while the mainland's inflation was affected by the rising producer price index.

Meanwhile, the debate over when and how the US Federal Reserve could begin to reduce some of its massive stimulus for the economy was on full display on Monday.

Two US central bank officials explained their support for an earlier withdrawal and a third said any change was still quite a way off.

The quarterly projections showed 13 of 18 officials favored at least one rate increase by the end of 2023, versus seven in March.

Federal Reserve chairman Jerome Powell said the US economy continues to show sustained improvement and forecast further job market gains and a decline in inflation from current elevated levels.

Rocky Wang Lei, portfolio manager of Thornburg Investment, believes the Federal Reserve was comfortable with rising yields and inflation which was temporarily overshooting its target level.

"For the Fed, the rate hikes seem to remain in the distant future," said Wang.