Macau pays price for economic boom with 12-year inflation high
Inflation in Macau hit a 12-year high last month as prices in the booming casino city rose almost twice as fast as in Hong Kong.
A surging economy, an expanding labour shortage and massive investment inflows have created a perfect inflationary storm in Macau, pushing up the composite Consumer Price Index (CPI) by 7.12 per cent in December from a year earlier, according to data released yesterday by the city's Statistics and Census Service.
Price increases accelerated throughout last year, starting from a 3.83 per cent rise in January. Soaring food and housing costs drove the increase, both going up more than 12 per cent last month. December's CPI rose 0.98 per cent over the previous month, resulting in an average annual inflation rate of 5.57 per cent.
Macau's inflation rate compares with a 3.8 per cent increase in Hong Kong's composite CPI in December and 2 per cent for the year.
The trend shows little sign of slowing. Macau's economy grew by an average 29.4 per cent during the first nine months of last year, while the unemployment rate dropped to 2.9 per cent in the three months to November.
Wage inflation in the city is being driven in part by government policy, particularly by a moratorium on importing foreigners to work as casino card dealers.
The government submitted two bills to the Legislative Assembly on Monday that would increase pressure on rising wages.
A new crackdown on illegal workers would raise fines to a maximum 1.5 million patacas or three years' imprisonment. At the same time the Executive Council tabled a 7.2 per cent pay increase for civil servants.
Both of those measures are likely to add to inflationary pressures in the city.
As in Hong Kong, Macau's currency peg means it cedes an important tool to fend off rising prices.
