HK Finance Chief Expects ‘Moderate’ Inflation in ‘Buffered’ City

Hong Kong’s rate of inflation for the full year is likely to remain at a “roughly moderate” level of 2.1% because the city is buffered from some of the factors that have exacerbated inflation in the US and Europe, according to Financial Secretary Paul Chan.

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(Bloomberg) — Hong Kong’s rate of inflation for the full year is likely to remain at a “roughly moderate” level of 2.1% because the city is buffered from some of the factors that have exacerbated inflation in the US and Europe, according to Financial Secretary Paul Chan. 

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High international energy prices have helped drive up inflation in Europe and the US, but power and transport account for only about 3% of Hong Kong’s consumer price index, limiting their inflationary impact, Chan wrote in his blog Sunday. 

Housing expenditure, which accounts for 40% of the Asian financial hub’s index, has continued to decline, while the supply of fresh food and vegetables from the mainland has remained stable, with the increase in prices easing slightly from the peak in March, he said. 

To curb rising inflation many developed economies including the US have embarked on interest rate hikes, and the market expects the Federal Reserve to raise them again next month, Chan said. Another increase in the US may mean that deposit and loan rates in Hong Kong, including the preferential lending rate, will also go up, according to Chan.