Inflation at three-year high due to rent, food
Inflation in the city is running at a three-year high of 5.6 per cent, with little sign of it falling any time soon, according to the experts.
The Census and Statistics Department figure for June, announced yesterday, was up from 5.2 per cent in May.
The underlying inflation rate, which strips out the effects of relief measures such as a one-month extra payment to welfare recipients and two months' rent for public housing tenants, was 5.5 per cent.
'Private housing rentals and food prices were the two major driving forces, accounting for about 70 per cent of the year-on-year rate of increase,' a government spokesman said. The economy would continue to see upward pressure on prices in the coming months, he added.
'While global food and commodity prices are likely to stay elevated, domestic cost pressures may also increase as a result of the brisk expansion of the local economy since early 2010,' the spokesman said.
The underlying consumer price index for the first half of 2011 was 4.5 per cent higher than it was a year earlier, prompting Dr Raymond So Wai-man, dean of Hang Seng Management College's school of business, to forecast inflation for the year will reach 6 per cent or higher.
'There is not much the government or we [consumers] can do about it,' So said. 'Ours is an imported economy with 80 per cent of our food coming from the mainland, where inflation is above 6 per cent already.'
He said there was unlikely to be a sharp drop in inflation, as such a decline would be indicative of a rapid fall in property prices 'which will not be nice for most people'.
So instead of wishing for lower inflation, people should hope for a salary increase, he said.