Hong Kong's Consumer Price Index Up 2.4% in March

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April 23, 2007 - Hong Kong's overall consumer prices rose 2.4% in March 2007 over a year earlier, according to the Composite Consumer Price Index (CPI) statistics released today by the Census and Statistics Department of the Hong Kong Special Administrative Region Government (HKSARG).

The 2.4% year-on-year increase in March 2007 was larger than the corresponding rate of 0.8% in February and 2.0% in January this year. The significantly smaller increase in February (0.8%) was attributable to the waiver of public housing rentals by the Housing Authority and Housing Society for the month of February 2007.

Netting out this special factor, the year-on-year increase in the Composite CPI in February 2007 was 3.1%, and the corresponding rate of increase for January and February 2007 taken together was 2.5%. The 2.4% increase in the Composite CPI in March 2007 was close to the 2.5% in the first two months of the year.

It is useful to look at the year-on-year rate of change for January and February taken together because the year-on-year changes in these two months were distorted by the difference in the timing of the Lunar New Year, which occurred in February this year but in January last year.

A HKSARG spokesman pointed out that consumer price inflation remained moderate in March. The distinctly faster year-on-year increase in the Composite CPI in March than in February was mainly due to the waiver of public housing rentals for February. Netting out the effect of the waiver, the rate of consumer price inflation in March was actually similar to that in the preceding two months combined.

The spokesman added that increasing price pressures from the external front are expected, given the recent weakening of the US dollar. Nevertheless, overall inflationary pressures should be cushioned to some extent by the continued distinct growth in labor productivity. Furthermore, the Budget measure of rates waiver for two quarters and other one-off factors will also help to keep the headline inflation down in the coming months.