Food and power price rises push inflation to 4.3pc

Real inflation in Hong Kong jumped to 4.3 per cent last month, the highest in almost a decade.

Higher prices for fresh vegetables, freshwater fish and electricity as well as for dining at restaurants were largely responsible for the rise in the rate last month, the government said.

However, one-off rates concessions kept the official figure artificially depressed at 3.2 per cent - down from 3.8 per cent in December, the government said. The relief measures did not apply in the last quarter.

'From a broader perspective, rising food and energy prices had led to rising inflationary pressures in many parts of the world,' a government spokesman said.

'Looking ahead, the snowstorms on the mainland caused some disruptions in the food supply in the latter part of January, and will continue to have an impact on food prices in February.'

Chamber of Commerce chief economist David O'Rear said he expected inflation to climb higher and average 5 per cent this year.

Escalating inflation is a concern for Hong Kong, which has few fiscal weapons to combat it because of the currency peg. The spokesman said recent inflationary pressure partly reflected strong consumption demand, but he warned that higher energy prices, a more expensive yuan and rising housing rentals also posed a risk of higher inflation.

Heavy snowfall and transport chaos across the central mainland last month sent prices for meat and vegetables soaring. The severe winter weather also disrupted transport links and led to rising prices, especially for some vegetables.

Hong Kong relies on the mainland for much of its fresh food supplies.

According to Census and Statistics Department data, pork prices soared 48.2 per cent last month, beef was up 41.4 per cent, fresh vegetables rose 20.1 per cent and poultry increased 17.2 per cent. Food, not including meals consumed at restaurants, climbed 15.6 per cent.

Similarly, canned meat prices rose 34.7 per cent and frozen meat increased 18.6 per cent.

Prices for electricity, gas and water increased by 7 per cent.

But housing edged up only 1 per cent, as a result of the rates concessions. Durable goods prices dropped 3.4 per cent last month.