Advertisement
Advertisement

Housing and food blamed for inflation surge to 8.6pc

INFLATION was back on the climb last month, with the consumer price index A (CPI[A]) rising 8.6 per cent compared with November last year.

Economists blamed the rising costs of food, housing, services and transport for the jump.

In October, inflation had moderated to 7.9 per cent on a year-on-year basis.

The CPI (A) is the most frequently quoted barometer of living costs for about 50 per cent of the territory's households.

Because the index carries a heavy weighting on food, it is sensitive to price movements.

'Housing, food and services drove up inflation in November,' said Enzio von Pfeil, chief regional economist at Warburg Securities.

Advertisement

'And within the non-food inflation component, inflation has been rising a lot faster.' Under CPI (A), food prices rose 6.6 per cent, housing was up 12.1 per cent and miscellaneous services jumped 12.1 per cent.

Mr von Pfeil said that within the non-food component, housing was commanding the most attention.

'It contributed to 30 per cent of inflation - just a little below food price inflation,' he said.

Hong Kong General Chamber of Commerce chief economist Ian Perkin said the rise in world commodity prices was also beginning to flow through to affect inflation in the territory.

Advertisement

'We are starting to see a flow through in the rise of import prices due to higher commodity prices in the world market,' he said.

'For example, in 1993, overall world commodity values fell 0.6 per cent. For the first nine months of this year, world commodity prices increased 2.8 per cent.

Advertisement

'Some effects of the appreciation of the yen are also starting to come through. All these have helped to fuel inflation.' A government spokesman said the faster growth of inflation last month was due mainly to a low base of comparison, particularly in respect of the food component in November last year, as the prices of vegetables and salt water fish had softened at that time.

Credit Lyonnais chief economist Jim Walker warned that inflation on food prices would accelerate next year given the high food prices in China, which was also the major provider of food to the territory.

'Food inflation in China was running at over 30 per cent this year while it hovered around the range of six per cent in Hong Kong,' Mr Walker said.

Advertisement

He attributed the lower food prices in Hong Kong to the devaluation of the yuan at the beginning of the year.

'However, come January 1995, there will be no more devaluations of the yuan and, at that point, Hong Kong will import more of China's food price inflation,' he said.

The CPI (B), which measures living costs for the sandwich class, grew 9.5 per cent in November year-on-year.

Advertisement

The Hang Seng CPI, which measures the living costs for better-off households, jumped to 10.6 per cent from 10.2 per cent last month.

The composite CPI, which comprises the CPI (A), CPI (B) and the Hang Seng CPI, rose 9.5 per cent.

Advertisement
Post