Standing next to a 4.5-metre-long oven churning out caramel-coloured mooncakes stuffed with salted egg yolks and lotus seed paste, mooncake baker Tse Ching-yuen is feeling not only the heat of the kitchen but the hot air of inflation blowing from the north. Tse, the owner of the historic Tai Tung Bakery in Yuen Long that was set up by his late father in 1943, laments that prices of mooncake ingredients, tin boxes, wages and rents are rising rapidly in the lead-up to the Mid-Autumn Festival on Monday.
The 81-year-old is carefully counting his pennies while his chefs and workers are busy kneading dough, brushing mooncake crusts with whisked eggs and putting them into a gigantic oven at the bakery's central kitchen in Tuen Mun. There are now fears that this most traditional of Chinese delicacies is under threat because of rising costs and changing market conditions.
'This year is particularly more difficult even though sales have been brisk,' Tse told the South China Morning Post. 'We are victims of cruel inflation.'
Prices of lotus seed imported from the mainland climbed to HK$88,000 a tonne in June from HK$60,000 in March. Prices have since fallen to HK$42,000, but remain above the price of HK$28,000 per tonne last year.
Tse blames his woes on excessive liquidity on the mainland, which has driven up prices of everything from fuel to flour. Consumer price inflation on the mainland has climbed for the 25th consecutive month, and reached a 36-month high of 6.5 per cent in July.
Hong Kong - which is largely reliant on imports of food and fuel, of which the mainland is a key supplier - saw consumer price inflation hit a 16-year high of 7.9 per cent in July.
Beijing has been trying to stem inflation by raising interest rates and the amount of funds banks must set aside as reserves. Even so, Hong Kong is nevertheless susceptible to the effects of the supercharged mainland economy, with small businessmen like Tse particularly vulnerable.