Consumer price index posts 0.8pc rise in May

PUBLISHED : Friday, 24 June, 2005, 12:00am
UPDATED : Friday, 24 June, 2005, 12:00am

Pricier package tours and jewellery, as well as a slowing decline in housing rents, helped push inflation up by 0.8 per cent in May compared to a year ago, the government said.

The increase in consumer prices is higher than the 0.5 per cent recorded in April but on par with February and March. Inflation in May was roughly in line with analysts' estimates.

A government spokesman played down the price increase, stressing that 'overall inflationary pressure remained modest, with prices of most commodity items recording only mild increases'.

'As consumer demand continues to strengthen, consumer prices are expected to edge up gradually in the months ahead,' he added.

Analysts expect inflation to top 1.1 per cent in 2005 and are projecting price increases of 1.9 per cent or lower in 2006.

One of the main causes of the higher inflation number was private housing rents, which recorded a 1.3 per cent year-on-year fall in May, compared to the 2 per cent drop recorded in April. Electricity, gas and water rose 3.8 per cent year on year. Food such as fresh vegetables was up by 3.7 per cent, while apparel was higher by 2.2 per cent.

Leonard Cheng Kwok-Hon, who heads the department of economics at the Hong Kong University of Science and Technology, noted that it was natural for consumer prices to pick up as the overall economy improved.