Hong Kong Inflation Rate Down to 3.6% in March


In March of 2013, the year-on-year headline inflation rate slowed to 3.6 percent from 4.4 percent recorded in the previous month, mainly due to a decline in prices for durable goods.

According to the Composite CPI, overall consumer prices rose by 3.6% in March 2013 over the same month a year earlier, slightly smaller than the average rate of increase in January and February 2013 (3.7%). The comparison to the average rate of increase in January and February is to neutralise the effect caused by different timing of the Lunar New Year between two years. Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation rate) in March 2013 was 3.7%, also slightly smaller than the average rate of increase in January and February 2013 (3.8%), mainly due to the decreases in the prices of fresh vegetables.

The year-on-year rate of increase in the Composite CPI in March 2012 (3.6%) was smaller than the corresponding increase in February 2013 (4.4%). Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI in March 2013 (3.7%) was also smaller than that in February 2013 (4.4%). Nonetheless, it should be noted that the higher inflation figure for February was affected by the difference in timing of the Lunar New Year, which occurred in February this year but in January last year.
 
On a seasonally adjusted basis, the average monthly rate of increase in the Composite CPI for the 3-month period from January to March 2013 was 0.4%, and that for the 3-month period from December 2012 to February 2013 was 0.5%. Netting out the effects of all Government's one-off relief measures, the average monthly rate of increase in the Composite CPI for the 3-month period from January to March 2013 was 0.4%, and that for the 3-month period from December 2012 to February 2013 was 0.5%.
 
Amongst the various CPI components, year-on-year increases in prices were recorded in March 2013 for housing (5.2% in the Composite CPI and 6.2% in the CPI(A)); electricity, gas and water (5.1% in the Composite CPI and 5.4% in the CPI(A)); miscellaneous services (4.5% in the Composite CPI and 3.4% in the CPI(A)); meals bought away from home (4.4% in the Composite CPI and 4.6% in the CPI(A)); food (excluding meals bought away from home) (2.6% in the Composite CPI and 2.4% in the CPI(A)); transport (2.3% in the Composite CPI and 1.4% in the CPI(A)); alcoholic drinks and tobacco (2.1% in the Composite CPI and 1.9% in the CPI(A)); miscellaneous goods (1.0% in the Composite CPI and 1.4% in the CPI(A)) and clothing and footwear (0.5% in the Composite CPI and 1.8% in the CPI(A)).
 
On the other hand, year-on-year decrease in prices were recorded in March 2013 for durable goods (-4.3% in both the Composite CPI and CPI(A)).
 
A Government spokesman said that the year-on-year rate of underlying consumer price inflation eased slightly to 3.7% in March, from the average of 3.8% in January and February combined. The latter figure is used for comparison because it avoids the distortions caused by the timing of the Lunar New Year. In March, prices of basic foodstuffs saw a slower year-on-year increase, while those of many other CPI components remained moderate.
 
The spokesman commented further that, looking ahead, inflationary pressures should remain largely contained in the near term, given the moderated increase in import prices and below-trend growth of the local economy. Nevertheless, we need to stay alert to the upside risks to inflation, including the progressive feed-through of the increases in private housing rentals over the past year or so. The Government will continue to monitor the inflation situation closely, particularly its impact on the lower-income people.

Census and Statistics Department | Joana Taborda | joana.taborda@tradingeconomics.com
4/22/2013 10:10:15 AM