CPI declines but food prices rise 13pc in HK

Business | Winnie Lee 24 Apr 2020

Hong Kong's composite consumer price index, or underlying inflation rate, was 2.6 percent in March, lower than the average rate of a 3.1 percent year-on-year increase in the first two months, but the price of food rose by 13 percent.

The price of food rose 13 percent from a year ago in March, followed by prices of miscellaneous goods, which rose 3.5 percent.

Overall consumer prices rose by 2.3 percent in March over the same month a year earlier, higher than the average rate of a 1.8 percent increase in January and February, mainly due to the government's payment of public housing rentals and waiving of two-thirds of rent for tenants of group B estates run by the Hong Kong Housing Society in January.

A government spokesman said that the underlying inflation rate went down as food inflation moderated slightly, while price pressures on most other major CPI components showed varying degrees of easing.

Mavis Hui Ming-wai, director of equity research at DBS Vickers Securities, expects the annual retail sales in Hong Kong will drop 17 percent this year, even if the coronavirus can be contained before July, and drop 30 percent at most during the second quarter.

Hui said local retail sales rely on Chinese tourists, and their willingness to travel is still weak, adversely affected by Golden Week sales.

Mark Matthews, managing director at Julius Baer, predicts Hong Kong's economy will drop 5 percent this year with the rising jobless rate.

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