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HK consumer prices trot higher as pork feeds inflation

by 5m Editor
23 July 2007, at 9:34am

HONG KONG - Hong Kong's inflation, which accelerated for the first time in three months last month, driven by a surge in pork prices, is likely to tread higher in the coming months on the back of pork and other food prices rallying in China.

The Consumer Price Index in June increased 1.3 percent from the same month a year ago, accelerating from 1.2 percent in May, according to Census and Statistics Department statistics released Friday.

The headline figure was distorted by the budgetary rates concession given for the second and third quarters. Netting out this factor, consumer prices rose 2.4 percent, up from 2.3 percent in May.

"The slight creep up was due to price hikes in pork as a result of supply shortage," the government said in a statement.

"Rising food prices and its volatility would continue to play a bigger role in affecting inflation in the near term."

Food prices last month gained 3 percent from a year ago, compared with a 2.5 percent gain in May. Food accounts for 27 percent of Hong Kong's CPI basket. Hong Kong imports most of its food from China. "Indeed, the recent food price rally in the mainland likely has exerted upward pressure on Hong Kong's headline inflation, a situation that could be further exacerbated in the near term by the recent flood in South China," said JPMorgan Chase economist Qian Wang.

Wang said the one-off rate concessions will be distorting the headline inflation figure, forecasting full-year inflation of 1.8 percent this year.

Source: The Standard

5m Editor