Consumer inflation set to ease further

Business | Eurus Yiu 23 Jun 2020

Overall consumer prices in Hong Kong rose 1.5 percent year-on-year in May, less than the corresponding 1.9 percent increase in April, due to the smaller increases in the prices of pork and fresh vegetables, as well as private housing rentals.

The main source of inflation, food prices rose 11 percent year-on-year. Rent also saw a 1.6 percent rise.

In contrast, electricity, gas and water recorded a 19.4 percent drop in CPI. Clothing and durable goods also recorded drops of 5.4 percent and 2.8 percent respectively.

Looking ahead, inflation should continue to ease in the near term, as both external and domestic price pressures are expected to abate further amid subdued economic conditions.

Food inflation is set to recede visibly against a high base of comparison, a government spokesperson said.

Meanwhile, Fitch forecast a 5 percent drop in the local real GDP and downgraded Hong Kong's rating to 'AA-', taking into consideration the risks from the introduction of national security law.

Fitch said Hong Kong's deep-rooted sociopolitical divisions remain unresolved. A signal of a possible change in the US' long-standing policy towards Hong Kong, following the plan to enact national security law in the city, could heighten uncertainty and dampen investor sentiment.

 

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